House of Representatives
8 August 1906

2nd Parliament · 3rd Session

  1. House of Representatives
  2. 2nd Parliament
  3. 1906

Mr. Speaker took the chair at. 2.30 p.m., and read prayers.

page 2475

QUESTION

GRADING OF BUTTER

Mr FULLER:
ILLAWARRA, NEW SOUTH WALES

– In the Kiama Indepen dent of the 3rd instant, a newspaper circulating widely in the South Coast dairying districts of New South Wales, the following paragraph appears: -

Mr. Hindmarsh, ML. A., states that the Federal Minister has agreed to allow the North Coast (Byron Bay) Company to grade its own butter.

I wish to know from the Minister of Trade and’ Customs if the honorable member was justified in making that statement. If so, will the Minister place all the butter factories’ in Australia in the same position?

Sir WILLIAM LYNE:
Minister for Trade and Customs · HUME, NEW SOUTH WALES · Protectionist

– What I told the representative of the Byron Bay factory was that I should be very glad to appoint their expert, or some person in their factory, as the representative of the Department, for the purpose of grading their butter, subject to periodical inspection, probably by Mr. O’Callaghan, with a view to seeing that everything was right. I wish to interfere as little as possible with the working of distant factories like that, and I am prepared to take similar action in connexion with every factory of any moment in New South Wales, or, indeed, in Australia.

page 2476

PAPERS

Mr. AUSTIN CHAPMAN laid upon the table the following papers : -

Paper relating to country telephone lines read by Mr. Hesketh at the Sale Convention of the Chamber of Agriculture,5th July.

The Clerk laid upon the table:

Report from the Joint House Committee as to the working of the Refreshment Rooms.

page 2476

QUESTION

LAUNCESTON MAIL DELIVERY

Mr AUSTIN CHAPMAN:
Postmaster-General · EDEN-MONARO, NEW SOUTH WALES · Protectionist

– Yesterday the honorable member for Darwin asked the following questions with reference to the delivery of mails at Launceston : -

Whether he will supply the House with information showing -

The times of the delivery of the mails at the Launceston Post-office for the last six months?

The times they should be delivered according to mail contract - if not at Post-office, on Launceston wharf?

The DeputyPostmaster-General, Hobart, has now furnished me with these replies : -

page 2477

QUESTION

HOURS OF DUTY OF POSTMASTERS

Mr AUSTIN CHAPMAN:
Protectionist

– On the 2nd August, the honorable member for Gwydir asked some questions with reference to the hours of service required from certain postmasters in Sydney and suburbs, to which I now wish to give the following replies : -

  1. The Postmaster-General is not awareof any statement having been made, in answer to a question by the honorable member for Canobolas, to the effect that postmasters are permitted to usetheir own discretion as to absenting themselves from their offices, nor has he any knowledge of the examination referred to, as reports of proceedings of Appeal Boards are not communicated to the Department.
  2. No; and the Acting-Deputy PostmasterGeneral, Sydney, states he has made inquiry of the principal officers, and finds that none know of any case in which a postmaster has been called upon for an explanation of his absence when rung up by telephone.
  3. No. The Acting-Deputy PostmasterGeneral, Sydney, reports as follows: -

I am notaware of any such understanding ; the matter of where officers reside could not be taken into consideration in the arrangement of their duties. It is not a fact that postmasters are required to report themselves on duty to any call from the head office up to closing of the office at8 p.m.

  1. See answer to question No. 1.

page 2477

QUESTION

EX-DRIVER FAY

Mr DEAKIN:
Minister for External Affairs · BALLAARAT, VICTORIA · Protectionist

– In reply to the questions askedby the honorable member for Wentworth in reference to the case of exdriver Fay, the Minister of Defence has furnished the following additional information:

Driver Fay’s case, with others, has been fully considered by the Military Board, who reported as follows : - “ The Military Board finds that compensation, based on three years’ pay as the maximum payment, is on the same lines as provided for in the Employers Liability Act (Victoria). “ The regulations, as they at present exist, are, in the opinion of the Board, sufficient so far as the Permanent Forces are concerned.”

This report has been approved by Cabinet.

Driver Fay has, in addition to the three years’ pay, been granted permission to obtain medical advice and medicines free of charge at the Garrison Hospital, Sydney, for three years from date of his discharge from the forces.

An effort will be made to find Driver Fay some suitable employment in the Public Service.

page 2477

QUESTION

MILITARY DEFERRED PAY

Mr KELLY:
WENTWORTH, NEW SOUTH WALES

asked the Minister representing the Minister of Defence, upon notice -

  1. Are the following facts : -

    1. That, at the time of transfer of the New South Wales Military Forces to the Commonwealth,certainmembers of the Instructional Staff, Permanent Army Service Corps, Ordnance Department, and Military Clerical Staff, drew deferred pay, in accordance with Brigade Order 37 of1886, General Order 17 of 1889, an approval by the Chief Secretary in1898, and General Order2 of 1892?
    2. That in July, 1902, the payment of deferred pay was discontinued to the members of the Permanent Army Service Corps, Ordnance Department, and Military clerical staff, who had hitherto been drawing it?
    3. That, in 1903, the Minister of Defence approved of the payment to the above of the above deferred pay for the financial year 1902-3, while warning those concerned that that was the last occasion on which such payments would be made ?
    4. That such pay was afterwards discontinued ?
    5. That those formerly entitled to it appealed, on the ground that under section 84 of the Constitution they legally preserved a right previously existing under the State, and acknowledged for one year under the Commonwealth, to continue to draw this pay?
    6. ) That the Minister decided not to vary his decision, since (as advised by the Crown Solicitor) an order made by a State Minister prior to transfer can be cancelled at any time by the Commonwealth Minister?
  2. What is the total annual amount involved ?
  3. Was not such deferred pay invariably granted under the Stateregime on the certificate of the Commanding Officer that the services of the W.O. or N.C.O. concerned had been satisfactory for the year ?
  4. Is it not a fact that the intention and spirit of section 84 of the Constitution are that no officer of the State should suffer by his transfer to the Commonwealth ?
  5. Is it not a fact thatby the abolition of the above deferred pay, those concerned have financially suffered as the result of their transfer from the State to the Commonwealth?
  6. Will the Minister of Defence reconsider his Department’s decision in this matter?
Mr DEAKIN:
Protectionist

– I have been furnished with the following replies: - 1. (a) Yes.

  1. Yes
  2. Yes.
  3. Yes.
  4. Yes.

  5. Yes. 2.£365 perannum, so far as can be at present ascertained.

    1. Yes.
    2. It is not usual, in an answer to a question in the House, to advise upon the construction of a section of the Constitution. But there can be no doubt that the decision of the Minister was legal : See the judgment of the High Court in the case of Cousins v. the Commonwealth, 3 C.L.R., 529 - a test case, involving the salaries of a large number of public servants whose claims were founded on an Act of the State Parliament. The Privy Council has recently refused to grant leave to appeal from that judgment.
    3. Yes.
    4. That would be fruitless.

page 2478

QUESTION

SALE OF BRANDY

Mr HUTCHISON:
HINDMARSH, SOUTH AUSTRALIA

asked the Minister of Trade and Customs, upon notice -

  1. Under the new Customs regulations, is pure grape brandy made in the Commonwealth, and over two years old, prevented from being sold if blended with silent spirit of a less age than two years?
  2. Under the above regulations, can imported spirits of a less age than two years be sold?
  3. If so, is not an unfair advantage givento outside manufacturers, calculated to destroy the trade of Australian distillers?
  4. What immediate steps does the Minister propose to take in the interest of local distillers?
Sir WILLIAM LYNE:
Protectionist

– The replies to the honorable member’s questions are as follow : -

  1. According to the wording of the recommen dation of the Tariff Commission, and adopted in the resolutions, all such spirit must be two years old, but it is proposed to deal with this matter in the Bill.
  2. At present, this is the case, but it is proposed in the Bill to apply the same restrictions to imported spirit as to Australian in regard to purity and maturity. 3 and 4. It is intended to adjust this matter by legislation.

page 2478

QUESTION

COMMONWEALTH FINANCIAL PROBLEMS

Mr KNOX:
KOOYONG, VICTORIA

asked the Treasurer, upon notice -

In view of his indefinite reply given to a question asked yesterday - Whether he will now inform the House if it is the intention of the Government to introduce legislation, during this session of Parliament, to give effect to his recommendations for dealing with the financial problems of the Commonwealth ?

SirJOHN FORREST.- In reply to the honorable member’s Question, I have to state that the reply given was not intended to be indefinite. A Bill is in preparation.

page 2478

BUDGET

In Committee of Supply:

Debate resumed from 7th August (vide page 2432), on motion by Sir John forrest -

That the item, “President, £1,100” be agreed to.

Mr JOHNSON:
Lang

– It would be a good thing if we could all share the cheerful optimism of the Treasurer, and accept his views regarding the present condition of Australia, and the outlook for the future. No doubt the figures which he presented in support of the statements made in his Budget speech afford abundant evidence that the present condition of Australia, so far as its commercial, industrial, and manufacturing enterprises are concerned, is such as should give cause for the liveliest satisfaction, and the fact that for the last three years we have enjoyed such great prosperity completely refutes the statements of Ministers and their supporters that destruction of industries, ruin, and general desolation threaten this country. The Treasurer’s! Budget speech is also a striking commentary on the theatrical agitation at present being carried on by the honorable member for Melbourne Ports and others associated with him in his fiscal policy, who are visiting the Melbourne factories, and addressing the workers there upon the pressing need for increased duties, in order to stop what they term the continuous decay of Victorian and Australian industries. When the working men who have been the subject of so much political attention at their hands read the Treasurer’s Budget speech - if they ever do so -they will wonder what was thepurpose of the visits to them of these energetic politicians on ‘the eve of a general election.

Mr Mauger:

– They will wonder why they have not shared in the general prosperity.

Mr JOHNSON:

– Undoubtedly. I am about to deal with that point. The honorable member is assiduous in his endeavours to have the Tariff raised, in order to save the country from the ruin which he and those associated with him assert is threatening it; but I wonder that he does not point out to the working men and wage-earners whom he addresses that there is very little likelihood of the advantages resulting from the higher Tariff he is advocating being shared by them. It is manifest that no Tariff ever has been, or can be, devised which will increase the rates of wages by a single fraction.

Mr Mauger:

– The honorable member should read the last report of the Chief Inspector of Factories.

Mr JOHNSON:

– Whether the wages of employes in protected industries will be increased will depend largely upon the benevolence of their employers, and not upon any Tariff. High protective duties, by raising the prices), of commodities to consumers, give our local manufacturers opportunities to increase their profits ) but their employes do not necessarily receive a corresponding, or, indeed, any advantage in higher rates of wages. In spite pf a high protective Tariff, Wages Boards had to be established in Victoria for the purpose of increasing wages. During the period when the protective duties in force in Victoria were at their highest point, allegations of sweating were most frequent. It was during that period that commissions were .appointed to investigate charges of sweating, and Wages Boards were created to get rid of the evil. Those facts strongly support my contention that increased wages do not necessarily result from high Tariffs. Increased wages may come about naturally, or may be brought about artificially by special legislation. The latter, however, affects only men actually in employment, since it would be impossible.to compel men by Act of Parliament to give employment to others. These are facts which some of our mis* guided protectionist agitating friends who sit on the other side of the Chamber would do well to ponder over. I doubt very much whether any of the employers for whose benefit they wish to increase the Tariff would voluntarily sacrifice the advantages derived therefrom by increasing the wages of their employes to the extent of the full benefit of the duty. I doubt whether any one of them would voluntarily make an arrangement with his employes, giving them the benefit of any increase in the duties which may be brought about as the result of the present agitation. Indeed, I mightgo further, and say that I doubt whether, if it were a condition precedent to the raising of the Tariff that the advantages to be secured from higher duties were to go to the workers, the manufacturing employers would enthusiastically support proposals for higher duties. I venture to say that if the honorable mem ber for Melbourne Ports and other Ministerial supporters who are assisting him in this much-advertised and theatrically conducted agitation, were to make these proposals to the employers in the various industries, the facilities which they now enjoy for addressing the workers would not be so readily afforded to them. The employers would not thank them for conducting the agitation. In spite of the marvellous progress and prosperity to which the Treasurer has pointed, this fiscal agitation is being conducted for the purpose of creating a false impression in the minds of the wage-earners, and with a view to inducing them to vote for an increase of taxation. They are asked to believe that the condition of affairs is not as good as it should be - and I do not pretend that it . is, so far as they are concerned - and that by increasing the taxation on their stomachs and their backs, they will add to the prosperity, of the country, and to their own material comfort and financial well-being,. The whole thing is a huge electioneering farce, and if the workers were not such arrant fools, as many of them undoubtedly are, they would see through so transparent a device. Among the figures referred to with pride by the Treasurer of the Protectionist Government were those relating to Inter-State free-trade. The returns show that since the establishment of Inter-State free-trade, industry within the States and commercial intercourse between them has expanded to a marvellous degree. In the pre-Federation days of New South Wales, we were told by our protectionist friends that we should specially direct our Tariff restrictions against the neighbouring States of Queensland 1nd Victoria, whose goods were being dumped into New South Wales to the injury of the local producers. I believe that the Minister of Trade and Customs, when he was in the State Parliament, was a great supporter of that policy, and assisted tto actively promulgate it. When, however, Federation loomed on the political horizon, the politicians who had so strongly opposed the free admission of goods from the other States, suddenly “turned round and pointed out that great advantages would ensue if the Tariff barriers were knocked down, and the products of neighbouring States were freely admitted.

Mr Wilks:

– The stock fax was a notable example of the restrictions imposed upon free intercourse between the States.

Mr JOHNSON:

– Exactly. The very same politicians who were in favour of measures of that kind entirely renounced all their previous arguments and convictions, and advocated Inter-State free-trade, which they claimed would have the effect of enhancing, the prosperity of New South Wales. That was an argument that the free-traders had always used, but which the protectionists always scouted. The figures quoted by the Treasurer showed that the removal of Inter-State barriers has resulted in giving the producers of all the States a much more extended market.

Mr Poynton:

– Perhaps now that the honorable member for Gippsland is here, the honorable member will repeat what he stated about the stock tax.

Mr JOHNSON:

– I should have not the slightest hesitation in doing so, were it not already known to him. The honorable member for Gippsland is daily receiving fresh light.I believe that by continued association with men of advanced economic ideas, he will come to see the error of his protectionist ways. I feel sure that in view of the evidence before us of the extent to which Victoria has been benefited by free-trade limited, the honorable member for Gippsland, the honorable member for Laanecoorie, and others, will begin to inquire whether greater advantages would not flow from free-trade unlimited. If free intercourse between small communities is good, it should be mutually beneficial when it takes place between larger communities. If it is a good thing for two towns to freely trade with each, other, it must be beneficial for two provinces to do the same thing. If it is good for provinces it must be good for States, and the same principle is capable of application to the fullest extent, until it embraces all the nations of the universe. If it is a good thing for the States of the Commonwealth to trade freely with each other, I claim that the extension of the same principle to countries outside must inevitably result in the greatest possible benefit to all concerned. The undoubted evidence afforded during the past five and a halfyears of the prosperity and progress which result from the removal of restrictive barriers between States such as ours, should encourage us to extend the principle of free-trade beyond the shores of Australia, rather than agitate for the imposition of new duties to restrict and hamper trade.

Mr Webster:

– The honorable member’s leader has been silent upon that question for ten years.

Mr JOHNSON:

– That is incorrect; but even if it were true, it does not affect the principle.

Mr Wilks:

– The fact that the honorable member is now taking up astrong attitude upon the subject shows that he is a free man, and can speak as he likes.

Mr Webster:

– He may speak as he likes, but he cannot vote as he likes.

Mr JOHNSON:

– The honorable member is again in error. His freedom to vote as he thinks is destroyed, but 1 am perfectly free to vote as I choose. Honorable members on this sideof the Chamber are so liberal minded that there may be wide divergences of opinion amongst them on certain points without affecting their relations one to the other or their solidarity. Ourleader is one of those generous, liberal-minded men, who is able to sympathize with and appreciate the perfect freedom of thought and independence of action, which is the great characteristic of his supporters - a characteristic which distinguishes them from members on the other side of the Chamber.

Mr Webster:

– Why does the honorable memberspeak of something that is impossible?

Mr JOHNSON:

– I have no doubt that such a possibility is incomprehensible to the honorable member’s limited understanding, even though he possesses such a plastic temperament, and such elasticity of mind and conscience, that he can adapt himself to all kinds of political circumstances. I happen to be very well acquainted with the honorable member and his political career, but I do not wish to be led away into a discussion which may result in. less amicable feelings than those which now exist. As we are now in the last session of this Parliament, I think it is desirable to preserve the friendliest possible relations between honorable members in all parts of the House consistent, of course, with political differences of opinion.

Mr Webster:

– Then the honorable member ought not to introduce the fiscal question.

Mr JOHNSON:

– The honorable member is imposing an impossible condition, because the fiscal question is raised by the Treasurer’s Budget speech, which contains a proposal to increase the taxation upon the backs of the people. I may be safely relied upon to resist such proposals by every means in my power.

Mr Webster:

– Is the honorable member referring to the proposed spirit duties?

Mr JOHNSON:

– No. I am referring to the specific duties mentionedinthe Budget speech. Reverting to the subject of Inter-State free-trade, I may say that it is very gratifying to me, as a representative of New South Wales, and of perhaps the most truly free-trade constituency in that State, to find that it is the best customer for the products of all the other States.

Mr Tudor:

– That is due to the fact that New South Wales is far behind the other States in the matter of her manufactures.

Mr JOHNSON:

– The honorable member is entirely wrong, for the figures show that New South Wales is also the largest exporter to the other States, a fact which supplies the most complete answer to the interjection of the honorable member for Yarra.

Mr Tudor:

– What does she export?

Mr JOHNSON:

– The honorable member caneasilyascertain that information by reference to the Year-Book of Australia, although I am quite prepared to rely upon the figures which have been supplied by the Treasurer in his Budget. From these I gather that New South Wales annually takes goods from the other States to the value of £14, 864,911. In other words, she purchases goods from them to the value of nearly £15,000,000 per annum, and she exports to them commodities to the value of £12,263,472. Further, New South Wales imports from the other States goods to the value of . £5,484,880 in excess of Victoria, that is to say, she purchases the manufactures and products of. the other States to the extent of nearly £5,500,000 more than does Victoria, and thus leads the way in showing the true Federal spirit.

Mr Tudor:

– That is because we manufacture goods for our own requirements.

Mr JOHNSON:

– Victoria manufactures goods mainly for her own limited population, and yet aims at becoming an exporting country. She prided herself upon the high protective duties which she enjoyed prior to Federation, and now clamours for the restoration of those duties, mainly upon the plea that she wishes not only to supply her own home market, but to become a large exporting country ; but outside of Australia she would have to compete in an open market and must fail. The Treasurer himself, who, I understand, is a protectionist

Mr Wilks:

– Is the honorable member certain that he is a protectionist?

Mr JOHNSON:

– I am not quite sure about it. If he was a protectionist previously, he cannot surely remain one now after having presented the figures which he did to the Committee. The right honorable gentleman has shown in his Budget that, despite all the advantages which Victoria enjoyed for upwards of a quarter of a century, in the shape of much higher duties than are now being collected, New South Wales, which has always been the freetrade State of the group, has, in the matter of her exports to the other States, been able to beat her by a very large margin. I have already shown that her imports from those States exceed those of Victoria . by £5,500,000, and that her exports to them are £3,533,285 in excess of those of Victoria.

Mr Webster:

– Is that result due to free-trade ?

Mr JOHNSON:

– Yes; Inter-State freetrade. It is due to the removal of the fiscal barriers which formerly existed’ between the States, and which prevented the free interchange of commodities between them.

Mr Webster:

– It is because of the protective duties which New South Wales at presentenjoys.

Mr JOHNSON:

– No.Ifthat were so Victoria should certainly show a lead, as she had a long start with much higher duties. Her population is not very far short of that of New South Wales, and she has had all the advantage - not of six and a half years’ experience of a comparatively low Tariff, such as exists at the present time-

Mr Mauger:

– I am glad to hear the honorable member admit that. .

Mr JOHNSON:

– I mean a low Tariff from a protectionist stand-point. If the high protection which Victoria enjoyed for upwards of a quarter of a century had really been beneficial to her. she ought to show to decided advantage in the matter of her exports to the other States as compared with New South Wales, instead of which we find that her Inter-State export trade is over £3,500,000 behind that of New South Wales. In Victoria, too, we hear a constant clamour for more protection. But in New South Wales we have no such clamour, and in this connexion; it must be recollected that New South Wales has never demanded the Tariff which is in operation to-day. As a matter of fact, she would be glad to get rid of it, as was shown when the electors were .invited to record their votes last election on the fiscal question.

Mr Webster:

– In voting for the Bill, they voted for a protective Tariff.

Mr JOHNSON:

– The honorable member is attempting to mislead the Committee. They voted for the Bill, but they did not intentionally vote for a protective Tariff.

Mr Webster:

– The adoption of a protective. Tariff was involved in the Braddon blot.

Mr JOHNSON:

– That was a danger that I and others who opposed the acceptance of the Bill unavailingly pointed out. Did not Sir Edmund Barton, the present Prime Minister, and the Minister of Trade and Customs, wHen they were endeavouring to persuade the people of New South Wales to vote for the Constitution, assure them thai it would not be a protective Tariff which would be imposed by this Parliament, but a Tariff which would suit alike free-traders - by which I presume thev meant revenue Tariffists - and protectionists. When we who opposed the Bill pointed out that the acceptance of the Constitution would saddle New South Wales with increased taxation, wo were answered by these gentlemen with the declaration that it would do nothing of the kind.

Mr Webster:

– The honorable member himself has said that the Tariff has benefited New South Wales

Mr JOHNSON:

– I have not said anything of the kind ; but she has progressed in spite of the Tariff, not because of it. I say that even under existing conditions that State shows to better advantage than does Victoria or any of the other States. I mentioned Victoria in particular, because she is the next largest State - from the stand-point of population - to New South Wales. In the figures presented by the Treasurer, Victoria shows to great disadvantage as compared with New South Wales, both in regard to her imports and her exports, so far as the Inter-State trade is concerned.

Mr Wilks:

– She never shows up badly when there is a bit of loot on the board.

Mr JOHNSON:

– Some Victorian manufacturers do not show up too well. That the bad’ points associated with the desire to grab more than one’s fair share always come to the surface, has been evidenced in connexion with many matters which have been before this House during the currency of the present Parliament.

Mr Wilks:

– I would not leave that theme now, because the honorable member has warmed up honorable members opposite.

Mr JOHNSON:

– It is a very good thing that I have been able to accomplish that. I hope that their consciences will be warmed to an appreciation of the fact that for many years they have been pursuing a wrong course, and that, prosperous as the treasurer has shown the country to be, that prosperity has not been brought about by restrictive Tariff legislation, but in spite of it. It has not been due to any legislation enacted by this Parliament, or by the States Parliaments, but is the result of the natural productiveness of Australia, its boundless resources, its good seasons, the immense advantages which it offers to. capital and labour for the purposes of exploitation, and to the industry, energy, pluck, and perseverance of the people who are settled here. Having regard’ to the natural advantages which we enjoy, a very great deal of extremely pernicious legislation would be required to seriously set back this country for any protracted period. The fact of the matter is that our progress is due to a number of other agencies which are wholly unconnected with legislation of any kind. Whilst we enjoy good seasons, and are possessed of a land which contains millions and millions of untold wealth, only awaiting the hand of labour to pluck it from the bosom of the earth, we must continue to prosper. The principal needs of this country are, first, the destruction of land monopoly, and secondly, the opening up of our territory to a sturdy population of yeomanry - to persons who will settle upon a free soil, and develop all our primary resources, without State coddling or spoon feeding,- thus creating a solid foundation for prosperity for all time. I do not see any proposals in the Treasurer’s Budget which are likely to bring about that result. Certainly I give some honorable members of the Labour Party credit for realizing; that the two needs to which I have just referred are primary essentials to our prosperity. In so far as they realize that, I am heartily in accord with them. It is only when they come to deal with the problem of how we may best bring about the conditions which are desirable, that I find myself very reluctantly compelled to part company with them, and to oppose their proposals, because they seem to me to be entirely wrong. Of course, I may be wrong myself. None of us can say absolutely that any honorable member is right in his opinions.

Mr Carpenter:

– The honorable member is getting on.

Mr JOHNSON:

– At any rate, from my point of view, the socialistic proposals of honorable members opposite are wrong, and for that reason I must oppose them. At the same time there are many things which they advocate with which I am very much in sympathy. Broadly speaking, I am more in sympathy with a good many honorable members sitting upon the opposite side of the Chamber - and especially with those who occupy seats in the Labour corner - than I am with some of those with whom I find myself associated. Of course, I am speaking in a political, and not in a personal sense. The trouble is that the Labour Party advocate measures utterly destructive of freedom, and impose conditions which make it . impossible for men of democratic tendencies to become permanently associated with them, which is a matter of very great regret to me. I now pass to another phase of this question which presents itself to my mind. The Treasurer’s figures eminently satisfactory as they are so far as they go, do not necessarily indicate that the people of the country, as a whole, are prosperous. The volume of trade and the receipts from taxation are not the most reliable dataupon which to found a correct estimate of the condition of the people as a whole. Especially is this the case in regard to taxation, because when we point to our Customs receipts, or to receipts from other sources of taxation as an evidence of general prosperity, we are very likely to be misled. This fact will be patent to anybody who has studied the figures which Treasurers in other countries are able to produce, and which are not indicative of the general condition of those countries. It often happens that in countries showing the best returns in respect of taxation the people themselves are living upon the verge of starvation.

Mr Wilks:

– As in China.

Mr JOHNSON:

– We may take the position of the people in Russia, China, and almost any country where great poverty prevails

Mr Webster:

-Does the honorable member assert that poverty exists in China ?

Mr JOHNSON:

– If the honorable member has read anything about that country he will know that, except amongst certain classes, great poverty prevails there. Are we not accustomed to hear the protectionist members of this House, including, the honorable member himself, asserting time after time that we should havehigh Customs duties to prevent the competition of goods made by Chinese pauper labour? Is it not common for them to refer also to thepauper labour of the Chinese within the Commonwealth ? That being so, is it not fair to assume that if Chinese are prepared to work for pauper wages here, it is because those wages represent agreat advance upon what they would be able to earn in their native land?

Mr Wilks:

– Many of the Chinese here are merchant princes.

Mr JOHNSON:

– As compared with their fellow-countrymen in China, doubtless many of them are. Statistics relating to revenue and expenditure, and trade, com mence andfinance, do not necessarily afford a fair indication of the condition of the- people. It may well happen that, notwithstanding that such statistics show a great increase in the Customs revenue, and in production, manufactures, commerce, and other directions,a very ‘ large proportion of the population are not enjoying the benefit of the progress thus disclosed. We have unemployed agitations in Victoria and elsewhere.

Mr Wilks:

– But the agitation is keener in Victoria than in any other State.

Mr Mauger:

– Rubbish.

Mr JOHNSON:

– We have not in New South Wales such keen agitation on the part of the unemployed as prevails in Victoria, although I do not say that New South Wales has not an undue proportion of men who find it difficult to make ends meet. The problem of dealing with the unemployed is one to which politicians, having any claim to be considered statesmen, should address themselves. I commend this to the Treasurer, who is exceedingly optimistic.

Sir John Forrest:

– Perhaps I have been able tojudge the position better than the honorable member. Foolish optimism would not last for ever.

Mr JOHNSON:

– I do not say that it is foolish. Optimism is a very happy trait of character.

Sir John Forrest:

– It is scarcely correct to say that I am recklessly optimistic. I have not embarked on non-paying enterprises, and I have held office for twenty

V CELTS.

Mr JOHNSON:

– The right honorable member has been living in a State which owes it prosperity to the discovery of rich gold deposits within its borders. As a result of that discovery its population has rapidly grown, and it has obtained the cream of the workers of other States, and more particularly of Victoria.

Mr Webster:

– That discounts an argument that the honorable member has already addressed to the House in regard to the falling away of the population of Victoria.

Mr JOHNSON:

– On the contrary, the fact that so many Victorians have gone to Western Australia shows that the highly protective Tariff imposed by the State Parliament did not raise wages sufficiently high to enable the State to retain its population. The effect of that high Tariff was to drive out of the protected industries of Victoria a number of men who have been replaced by women and children, and many of those men went to Western Australia.

Mr Mauger:

– The men who went away were miners.

Mr JOHNSON:

– The men who ought to have been developing Victoria were forced, owing to the legislation of this State, to go where they could work under different conditions.

Mr Mauger:

– The honorable member has not studied the question.

Mr JOHNSON:

– I claim to have studied it perhaps a little more thoroughly than has the honorable member.

Mr Mauger:

– But not in relation to the position of Victoria.

Mr JOHNSON:

– I am afraid that I cannot compliment the honorable member on having made more than a superficial study of this question. The high Tariff imposed by Victoria did not enable her to retain her population. There was an exodus from the eastern States, and particularly from Victoria, to Western Australia, which has reaped the advantage of the influx of population so obtained. The right Honorable gentleman^ as Treasurer of Western Australia, also reaped the ad vantage of the prosperity which followed in the wake of that increase of population, and the discovery of rich mineral deposits which led to profitable employment being obtainable there.

Mr Webster:

– Does the honorable member mean to infer that none of the prosperity of Western Australia is due to the right honorable gentleman?

Mr JOHNSON:

– I should not like to say that; I know that the right honorable gentleman has done a great deal for that State. But he had to get the people there first. When I visited Western Australia last year, I saw one- of the gigantic works carried out on his initiative, and which has enabled the people of the goldfields more particularly to live under better conditions than previously obtained. I do not think the people of the other States will grudge Western Australia that prosperity, nor the right honorable gentleman the elation which it causes him. When interrupted, I was about to show that the Savings Banks returns furnish a far better guide to the condition of the people than is obtained by a study of statistics, such as have been furnished by the Treasurer, in relation to taxation, production, and trade. The Savings Banks are popular institutions to which recourse is had by men whose means are too small to enable them to take advantage of the ordinary banks of issue, and the returns relating to them afford us a somewhat better indication of the general conditions of the ‘ people than do statistics relating to trade and commerce.

Mr Poynton:

– They are very unreliable.

Mr JOHNSON:

– I do not assert that they afford an absolutely correct guide.

Mr Poynton:

– For instance, a man might own a house, and have nothing in the Savings Bank, whilst another having a few pounds to his credit might ha.ve no real estate.

Mr JOHNSON:

– Notwithstanding that fact, for which I make allowance, I hold that the Savings Banks returns offer us a better indication of the condition of the wage-earning classes than do the figures relating to trade and commerce. My study of the Savings Banks returns leads me to believe that they, might well be more satisfactory than they are.

Mr Webster:

– Are not the prison re- - cords also a guide in this regard?

Mr JOHNSON:

– I do not think they show as well as do the Savings Banks returns the condition of those who are the thrifty workers.

Mr.Webster. - Are there not thrifty men in prison.

Mr JOHNSON:

– Those in our gaols are mostly men who have been industrious in exploiting the property of others. That is a kind of thriffiness which we ought to discourage. I have taken from the Budget some figures that have enabled me to compile a return showing the ratio between the population and the savings of the people, as indicated by the Savings Banks returns. The returns quoted by the Treasurer, and also the Y ear-Book, from which, I presume, they were originally taken, show that the total population of New South Wales is 1,491,763.

Mr Webster:

– It is over 1,500,000.

Mr JOHNSON:

– I am taking the Budget figures. They are sufficient for my purpose; but if the actual population is that which the honorable member has stated, it emphasizes the point I wish to make. As against the population of 1,500,000, in round numbers, there are 361,383 depositors in the Savings Banks of New South Wales ; so that out of the total population of 1,500,000, 1,130,380 are non-depositors in Savings Banks. According; to the Budget, Victoria has a population of1,218,571, while the number of depositors in its Savings Banks is given as 461,345, showing that there are 757,226 non-depositors in the Savings Banks here.

Mr Poynton:

– What is the percentage?

Mr JOHNSON:

– I have not worked it out. Victoria shows a larger number of depositors in Savings Banks in proportion to its population than does New South Wales. But although in Victoria there are 99,962 more Savings Banks depositors than there are in New South Wales, the aggregate amount of their deposits is much less than the sum deposited in the savings banks of New South Wales.

Mr Webster:

– That is because the maximum amount upon which interest is paid ishigher in New South Wales.

Mr.JOHNSON.- The Victorian maximum is £250. and the New South Wales maximum, which was formerly £200, has now been increased to £300, so that it is higher.

Mr Webster:

– That accounts for the difference.

Mr.JOHNSON. - It makes no difference, so far as these figures are concerned.

Although in Victoria there are 99,962 more savings bank depositors than there are in New South Wales, the amount of their deposits is less than the amount of the New South Wales deposits by £2,449,969. In New South Wales the number of depositors in savings banks is 361,383, and the amount deposited by them £13,797,284, while in Victoria the number of depositors is 461,345, and the amount deposited by them £11,347,215.

Mr Webster:

– The honorable member forgets that they have Wren’s tote in Melbourne.

Mr JOHNSON:

– The existence of the totalizator here may very largely account for the difference, and, if so, “ it shows what a great evil it is to the community to have established in its midst institutions affording facilities for gambling. The population of the Commonwealth is estimated at 4,052,475, of whom 1,152,506 are depositors in savings banks, the aggregate amount of their savings being £37,205,039. Therefore, there are 2,899,969 persons, or, in round figures, nearly 3,000,000 persons, who have no moneyinsaving banks. I suppose that over 80 per cents of our population belong to the working classes, and these figures therefore show that the prosperity of the industrial section of the population might well be much greater than it is. Of course, an allowance must be made for the fairly large number who are endeavouring to secure houses or other property for themselves, and have no margin for saving left after they have fulfilled their obligations in regard to mortgages, and so forth, in carrying their plans into effect. There are, no doubt, many persons so situated, who do not use either savings banks or banks of issue. But, allowing for them, and also for those in better positions in life than are occupied by the ordinary wageearners, who use banks of issue, putting them at, perhaps, 1,000.000. there are still left more than 1,750,000 who have no savings either in banks or in other property.

Mr Storrer:

– Allowance must also be made for women and children.

Mr JOHNSON:

– In all calculations of this kind, allowance must be made for women and children, though it is to be remembered that many of the depositors in savings banks are women, and that many accounts are opened in these institutions on behalf of children. No doubt the figures indicate a tendency to the accumulation of wealth in the hands of a few, and .1 think that that tendency is further indicated by the figures relating to the business of the other banks. I have tried to obtain, in regard to banks of issue, figures similar to those which I have given in regard to our savings banks, but. unfortunately, they are not available, those in charge of our private banking institutions being either unwilling or unable to give such figures. I have ascertained, however, that the amounts deposited in banks, of issue aggregate ^106,000,000, as compared with the ^37,000,000 deposited in the savings banks, belonging for the most part to the members of the working classes, who form the largest section pf the community. The savings bank deposits average about £37 for each depositor, which is not very much to boast of. The honorable member for Bland last night made some reference to this aspect of the question, and, without going into details, suggested that we cannot take the statements of the Treasurer as an absolutely reliable index to the condition of the masses of the people. There is a great deal to be said for his contention. He has made certain proposals designed according to his ideas to bring about an era of improved prosperity, with which I shall not deal on the present occasion. I recognise the - unfortunately misdirected - zeal and energy which he has displayed for bettering the condition of the masses of the people; but I am not in agreement with him as to the means to be adopted to this end. Coming now to a matter affecting the administration of the Public Service of the Commonwealth, I wish to point out that, although the Customs revenue has increased in New South Wales by about £200.305, a cheese-paring policy is being pursued in regard to the payment of increments due to Customs officials. ‘ It has come to my knowledge that there are several officers, admittedly deserving and capable, who are entitled to promotion and to higher salaries, but for some reason or another the Estimates have been kept down to a point which does not admit of higher salaries being paid. This seems to me not warranted, in view of the expansion of the revenue of the Department. If there is such a large surplus that the Treasurer feels justified in proposing, to scatter money broadcast among the States, beyond what they are legitimately entitled to receive, I think that we ought to consider the position of the public ser- vants attached to the various Departments of the Government. I bring this matter under the notice of the Treasurer now, an!d, later on, will bring it more directly under the notice of the Minister of Trade and Customs. The cheese-paring to which I allude is taking place, not only in regard to the Customs Department, but in regard to other Departments as well. In yesterday’s Argus the following information was published under the heading ‘ ‘ Federal Public Service: Increments for Ensuing Year “ :-

In conformity with the policy laid down last year, Federal Ministers do not purpose paying increments automatically to members of the Federal Public Service. In the subjoined state- ‘ ment the intentions of the Cabinet are plainly set out : -

Unless a very special reason can be shown for depriving officers of their increments, these increments should be paid. I could understand that there might be reason for caution and economy if there were a danger of the Commonwealth being on the wrong side of the ledger; but, as the Treasurer is able to point exultingly to the existence of a large surplus on the transactions of last year, and to estimate a surplus on the transactions of the present financial year’, I think that these increments should be paid. I commend this matter to the consideration of the Treasurer, in the hope that he wilT bring it under the notice of the Public Service Commissioner.

Sir John Forrest:

– Salaries cannot be increased except upon the recommendation of the Commissioner.

Mr JOHNSON:

– Perhaps not, but the Treasurer can ask the Public Service Commissioner to give his reasons for making these recommendations in the face of an expanding revenue. If our revenue were decreasing, I could understand that the Commissioner would do well to recommend the exercise of caution in regard to the payment of increments.

Sir John Forrest:

– I think that the Commissioner is increasing the salaries fairly well.

Mr JOHNSON:

– What I complain of is that ‘there is a tendency to increase salaries in the one direction - to add to the incomes of those who are at the top of the tree and to ignore the interests of those who are in the lower grades of the service. I want to see the principle of granting increments more generally applied, and to secure the advantages of the system to those whose salaries are paid upon the lower scale. I am not at any time a warm advocate of the reduction of salaries, but if caution has to be exercised, and salaries have to be cut down below the amount which perhaps might be regarded as justly due to the officers, the most generous consideration should be given to those who are in the lower grades of the service. I commend this matter to the favorable consideration of the Treasurer, in the hope that he will bring it under the notice of the Public Service Commissioner. I do not wish to deal with this matter exhaustively at the present stage, because I shall have another opportunity to do so when the Estimates of the Customs Department are being considered. With reference to the Post and Telegraph Department, some most important proposals have been made. Although the Treasurer is able to point to last year as a most prosperous one, I think that there is every indication of a falling off in the Post and Telegraph revenue in the coming years, and that it behoves honorable members to give their serious attention to the proposals now being put forward. I notice that the Treasurer stated, as reported at page 1995 of Hansard -

There were extraordinary payments made during the year 1904-5, principally in Western Australia, for savings bank work bv the States, amounting to ,£18,000. But for this, the total increase on account of the Post and Telegraph “Department would have been about ,£209,000 instead of £191,631.

I should like to have some explanation of this item, because it seems to me that under ordinary circumstances, the Commonwealth should have had the benefit of that payment.

Sir John Forrest:

– The States paid us for certain work which we did for them in connexion with the States Savings Banks. They are now doing the work for themselves.

Mr JOHNSON:

– I have referred to the disabilities under which some officers in the Customs Department labour in regard to increments. I have also had brought under my notice the fact that many of the officers in the Post and Telegraph Department labour under similar disadvantages. Complaints are continually being made with regard to the grading of officers in the Post and Telegraph Department, and the salaries allotted ‘<-to them. There is no doubt that much dissatisfaction exists, and, although it is impossible for us to say positively whether or not it is justifiable, there must be some reason for the complaints that are repeatedly being brought under our notice. I have been informed upon more than one occasion, that it has become the practice in the Postal Department to employ clerical officers to do the work of general officers in the lower grade. I do not know how matters stand in other States, but it has been pointed out that in the General Post Office in Sydney clerical officers have been appointed to the mail branch to do work which should be performed by officers in the general division, and that when vacancies occur in clerical positions which these officers would be quite capable of filling they are overlooked. It has been explained that this injustice is due to the reluctance of the officers in charge of the branch to part with men who are thoroughly efficient at their work, and1 to thus run the risk of having them replaced by others less competent. That seems to me to be very unfair to the officers affected. If the representations made to me are correct, the verv efficiency of the officers is proving an effective bar to their promotion. This is another of the matters which ought to be brought under the notice of the Public Service Commissioner, with a view to the removal of any anomalies that may exist. I wish also to refer to the employment of railway station masters as postmasters, without the payment of any special remuneration for the work performed by them outside of their ordinary duties.

The ACTING CHAIRMAN (Mr.

Batchelor). - I would suggest to the honorable member that he could more appropriately deal with details such as he is now discussing when the Estimates of the Department come under consideration.

Mr JOHNSON:

– I had not intended to elaborate the matter at this stage. I shall content myself by saying that it seems to me unfair to deny remuneration to railway station masters for work performed by them as postmasters. I shall also have occasion to refer at a later stage to the insufficiency of letter carriers in certain districts. I will now pass on to the question of telephone extension. While we are giving away so much of our surplus revenue to the States, and the money is in some cases being squandered, we might very well apply some of it to the cheapening of our telephone system, and the extension of telephone facilities to districts which now either have none at all, or are very incompletely served. With regard to the penny postage proposal, I am not altogether opposed to the establishment of a penny postage, but I think that the Government contemplate too wide an application of the principle at the present time. To my mind, every effort should be made to unify the postal charges throughout the Commonwealth, and perhaps we might extend the same principle to New Zealand. But when it is proposed to go beyond the Commonwealth, and extend the penny postage to parts beyond the seas, I think that, in view of the large loss of £200,000 which it is estimated will be incurred, we ought to think twice about adopting the Government scheme. A penny postal rate within the Commonwealth would be very beneficial to the whole of the people, because of the frequency with which letters are sent from one part of a State to another, and from one State to another. A penny postal rate, however, as applied to parts beyond the Commonwealth would not be of any appreciable advantage to the great mass of the people, because letters are not sent abroad with any great frequency bv the same person, except, of course, in business circles. An exception, however, might be made in the case of New Zealand, in which Colony many of the people of the Commonwealth have near relatives. I do not think that the general puBlic have experienced any special hardship in having to pay 2’d. postage upon letters sent beyond the seas, and I think that for the present we might very well adhere to that rate for correspondence despatched outside the Commonwealth.

Sir John Forrest:

– We have to pay some regard to the interests’ of the Empire.

Mr JOHNSON:

– I am as enthusiastic as is the Treasurer in desiring to promote the interests of the Empire, but 1 do not think that the interests of the Empire are adversely affected by the present postage rate. The amount that itf is estimated we should lose by the adoption of penny postage is £200,000 per annum - a sum which is equal to our annual contribution to the maintenance of the British Squadron stationed in Australian waters. I think that we should regard this proposal very seriously. So far as, the Commonwealth is concerned, I am quite prepared to support a scheme for the establishment of penny postage, but from the knowledge at present in my possession I am inclined to oppose at the present time the extension of that system beyond the limits of Australia, and possibly Qf New Zealand. I do not think that we are justified in incurring such a heavy loss unless it can be shown that there is some distinct advantage to be gained from the scheme - an advantage which, so far, has not been disclosed. I notice that, in the memorandum of the Postmaster-General, reference is made to the success of the penny postage system in other countries. He specifically mentions the United States of America, Canada, Egypt, New Zealand, and France in this connexion. But he must recollect that there is a very wide difference between the population of older countries and that of Australia - a fact which is worthy of special notice, because upon the volume of the business transacted must largely depend the success or failure of the experiment. The only country to which he refers whose population approximates nearly to our own is that of Canada, and it must be remembered that her population has been on the up-grade ever since the establishment of the system. Further it should not be forgotten that, although the results of penny postage in that country show to advantage in comparison with the results of the rate which was formerly charged, the revenue returns from her Post and Telegraph Department - notwithstanding that she has a population of 6,000.000 as against our 4,000,000 - do not show to anything like the same advantage as do the returns of the Commonwealth. Again, whilst Canada’s population is 2,000,000 in excess of that of Australia we must remember that her population is steadily increasing, whereas ours is more or less stationary. Consequently, Canada can afford to indulge in experiments which, in the light of our vital statistics, we should not be warranted in undertaking. I repeat that whilst I am prepared to support a proposal for the establishment of a uniform system of postage throughout Australia, and for the issue of Federal postage stamps, I do not feel inclined at the present moment to commit myself to supporting a proposal to extend that system beyond the limits of the Commonwealth. For the present, however, I will keep an open mind on the question. I observe that the Government propose to ask for an increased vote of £7,000 in connexion with the Tasmania mail service. As the Treasurer has pointed out, this will entail an additional expenditure on the part of the Commonwealth of £5,600 as. a guarantee to the Cable Company against any loss which may be incurred by reason of the reduction of the telegraph rate, which, under the right honorable gentleman’s proposal, will be is. for sixteen, words, instead of is. 8d. as hitherto. This increase of £7,000, in addition to the £5,600, will make a total of £12.600. I do not wish to raise any objection to the granting of increased mail facilities to Tasmania, or to a reduction in her post and telegraph rates. Indeed, I think- that the policy which it is proposed to adopt in this connexion is one which ought to be pursued with a view to obtaining uniformity in all these matters throughout the States. I do not object to the increased expenditure proposed, especially in view of the fact that Tasmania has suffered a very serious diminution of revenue since she entered the Federation. But whilst I do not object to the contemplated reduction of rates in the case of Tasmania for the purpose of affording her very-much-to-be-desired facilities, I cannot understand why so much liberality is exhibited by the Department in some directions, and so much disregard of the public convenience in others, and particularly in the matter of telephonic communication. I experience the greatest possible difficulty in procuring anything like reasonable telephonic conveniences for my own constituents who happen to live out- side a certain area, and I think that the time has arrived when the whole of our telephone arrangements ought to be revised, when the whole of the regulations ought to be redrafted, and when we should secure a cheaper and more extended system throughout Australia. In some centres - and I have particularly in my mind a place in my own district which is only about thirteen miles from Sydney - extortionate rates are charged for telephonic communication, notwithstanding that they are only just outside the metropolitan radius. It seems to me that where population is concentrated that radius ought to be extended so that people who now suffer disabilities by living outside it might enjoy the benefits conferred by being called upon to pay only metropolitan rates. I now come to the question of the return of surpluses or balances to the States. In this connexion I desire to say that the practice which has hitherto prevailed of returning to the States revenue in excess of the three-fourths of the Customs and Excise receipts to which they are entitled under the Constitution has been a bad one. It is a policy which should never have been inaugurated unless we were in a position to continue it, .and! it is one which, as the Treasurer has admitted in his Budget, cannot be continued. What will happen? By-and-by, when we are no longer able to return to the States anything in excess of their three-fourths’ of the Customs and Excise revenue, an outcry will be raised bv them against the niggardliness of the Commonwealth. They will have come to regard it as a prescriptive right that they should receive something in addition to the three-fourths of the revenue to which they are entitled under the Constitution. The policy of handing over to the States surpluses of revenue, which have aggregated £5,233,000 is an entirely erroneous one. The Treasurer has admitted that it cannot continue, and he has pointed out that in the near future we are likely to incur increased obligations. I say that we ought to conserve our funds for contingencies of that kind. Whilst we have the-opportunity we ought to make provision to meet these prospective increases, and, possibly, some unforeseen expenditure. Instead of doing that Ave have been handing over these balances to the States, with the result that some of them are able to point in their financial statements to surpluses. I have always maintained that a surplus of revenue in the hands of a Treasurer is more indefensible than is a deficit. My reason for making that statement is that when there is a margin upon the wrong side of the ledger there is always a tendency to economize and to careful administration, but when a surplus exists there is always a direct incentive to extravagance, which is bad for all concerned. Further, it often happens that when an election is approaching a Treasurer who has in hand an immense sum which is not required for governmental purposes is enabled indirectly to bribe constituencies.

Mr Wilks:

– Does the honorable member think that the present Treasurer would do that?

Mr JOHNSON:

– The present Treasurer has the reputation of being an honorable gentleman, and so far as I have been associated with him he has well sustained it. When I speak of the possibility of surpluses being used in the direction I have indicated, I wish it to be distinctly understood! that I make no personal reference to the right honorable gentleman. Nevertheless, we must have regard to the ordinary tendencies of human nature, and we know that human nature is very much the same in every individual. I repeatthat surpluses offer a direct incentive to Governments - especially to corrupt Governments - to confer undue advantages upon constituencies which .are represented by their own supporters. That danger ought to be guarded against. Moreover, the existence of a surplus is indicative of over-taxation, and so far from tapping new sources of taxation it should be our duty to ascertain in what direction we can reduce the burdens of the people, so as to make our revenue and expenditure approach to correspondence. I do not see any proposals in the Treasurer’s Budget which show that 1 lie Government desire to reduce taxation. On- the contrary, I find that the right honorable gentleman intimates that after a certain period of years an attempt will be made, in the face of an increasing revenue, to increase taxation. There is no justification for that. On the contrary, we should, wherever possible, reduce taxation. The fact that, in addition to the three-fourths of the Customs and Excise revenue to which they are entitled, the States have received, since the establishment of Federation, nearly £5,233,000 - money which has. been squandered by being distributed broadcast among the States - shows that our taxation has been too heavy.

Mr Wilks:

– And we have not yet taken over all the services that we are entitled to control.

Mr JOHNSON:

– No regard seems to have been paid to that fact. If our taxation- be not reduced to the extent of the surplus annually distributed amongst the States, the money might well be retained to meet contingent liabilities that will have a tendency year after year to increase. But we have been throwing away the annual surplus, and enabling the States in some cases to show an excess of revenue over expenditure, which otherwise would not have been possible. In any circumstances, such a policy is mischievous. Last year the Commonwealth expenditure was ^4,494,841, being £111,432 less than was estimated ; and °to my mind the people of the Commonwealth were overtaxed to that extent. According to the Treasurer’s statement, the Commonwealth, was entitled to spend last year £5,324,766. As a matter of fact, however, only £4,494,841 was expended, leaving a balance of £829,926, which was handed over to the States as a voluntary present. The amount which has been paid away in that manner to the States during the last six and a half years is £5,233,591. That was an enormous sum for the Commonwealth to throw away when it was unnecessary to do so, and when it might have been utilized to much better advantage in other directions. It is estimated that the revenue for 1906-7 will show an increase of £90,157 ; but against that we have an estimated increase of expenditure totalling £525,374, or £435>2I7 in excess of the estimated increase of revenue. This discloses a very serious position, and one which, notwithstanding the optimism of the Treasurer, should receive the most careful attention, in order that it may be discovered whether something cannot be done to arrest the tendency to fling away money as recklessly as has been done. Although we have to provide for a loss in respect of the penny postage proposals, and also for improving our coastal defence, which is a matter of supreme importance that does not appear to receive the attention it demands, we have unnecessarily paid away huge sums to the States during the period to which I have re- ferred. Not content with this, the Government propose to hand over to the States this year a sum of £311,228 in excess of the constitutional three-fourths of Customs and Excise revenue, to which alone they are entitled. I hope that, in view of the necessity to meet the large expenditure that is projected, this will not be done. I come now to the question of bounties, concerning which I shall have more to say when the Bounties Bill is under consideration. The payment of bounties for the encouragement of industries may be, in certain circumstances, justifiable, but the general adoption of the practice is pernicious and indefensible, though less objectionable than that of levying protective duties. There are only two points in favour of the bounty system. The first is that, when we apply it to the encouragement of industries, we know exactly what we are paying ; whereas, when we impose protective duties for that purpose, we do not. In the second place, the payment of a bounty in respect of certain goods, unlike the imposition of a protective Tariff, does not increase the cost of these goods to the consumer. These are the only two recommendations in favour of bounties as against Tariffs that are levied to encourage local industries. If a bounty may be rightfully given to one individual at the expense of the whole community, to encourage the establishment and development of an industry, why should not the system be applied to. every one? Why should only certain industries’ be selected for such treatment? I have never been able to understand on what principle the practice of singling out a few industries to receive a benefit at the expense of the general community, and to the exclusion of the rest, can be defended. Whilst I fully recognise that in certain circumstances - as, for instance, in the case of a great national industry, from which the whole community would derive, either directly or indirectly, a benefit - the payment of a bounty would be justifiable, I have never been able to satisfy myself that the application of the system* in the manner proposed by the Government is justifiable. I am not in accord with the present bounty proposals of the Government. If we are to expend public money to encourage private industries - and especially if it is intended to encourage rural industries - the best course to pursue is to establish experimental farms and agricultural and technical colleges. By means, of such institutions we should be able to impart instruction in the., latest scientific methods of production, and in regard to all matters pertaining to the soil. In that way we should do far more than we could accomplish by granting bounties to different individuals to enable them to conduct experiments with respect to industries! which might or might not be successful, and which, even if they ‘ were, could not be continued, perhaps, unless further bounties were ..granted, or protective duties were imposed to take their place. There is no guarantee that the industries in respect of which bounties are to be paid will be able to continue without further assistance. When an industry survives the period in respect of which the payments are made, a demand is almost invariably made for an extension, or for the imposition of a protective duty, to prevent it from languishing or perishing. In voting for the payment of bounties for the encouragement of industries, unless we look far enough ahead, we may place ourselves in a false position in which, as free-traders, we will have ultimately to vote for the imposition of protective duties to enable those bounty -created industries to continue. I think that the money proposed to be paid away in the shape of bounties could be more profitably expended in establishing a Federal Department of Agriculture, to work in conjunction with the States. Such a Department could obtain the most up-to-date information with regard to the nature of our soils, the best fertilizers and implements to use, and the crops most suited to the soils and climatic conditions of different districts. Information of various kinds, which would improve the knowledge of those engaged in our primary industries, could in this way be obtained. Farming has been brought to the highest pitch of perfection in America and Germany, not by the granting of bounties to individual producers, but by the expenditure of public funds in the establishment of colleges of the kind I have indicated. There are many such colleges in Germany.

Mr Ronald:

– What is that system but the giving of a bounty ?

Mr JOHNSON:

– It is a very different thing. It does not mean the giving of a bounty direct to the individual, such as is proposed by the Government. It has been pointed out that in some cases industries were started merely for the purpose of securing bounties offered for their establishment, and that thev died away as soon as the bounties ceased. It was stated the other day by an honorable member that some time ago a bonus of £5,000 was offered by the Victorian Government for the local production of 5,000 yards of worsted; that the 5,000 yards were so produced, and that as soon as the bounty had been paid the industry vanished. The giving of bounties in this haphazard fashion has a tendency to create mushroom industries, which, after a brief existence, are never heard of again. In preference to the granting of bounties, I should like to see an expenditure in the direction I have indicated. By that means, not merely one or two, or even half-a-dozen, individuals would be benefited; but the whole of those engaged in our rural industries, and, indirectly, the community at large, would be advantaged by the expenditure.

Mr Henry Willis:

– The honorable member suggests the establishment of technical colleges?

Mr JOHNSON:

– Yes. I recognise that the Commonwealth should not come into competition with the States in this matter.

Mr Henry Willis:

– Why should not the Commonwealth take over the agricultural Departments of the States, and establish a Federal Bureau of Agriculture?

Mr JOHNSON:

– In my opinion, we should try to come to an arrangement with the States under which there can be established a Commonwealth Department of Agriculture, to work in conjunction with the Departments of the States, the Commonwealth arranging for the financial support of the necessary institutions, and the States providing the land and buildings required for experimental farms and colleges’ of instruction. With such mutual co-operation, we should be able to provide facilities ‘for improving the knowledge of those engaged in primary production, and enabling them to work under the very best conditions - facilities such as have been afforded in Germany and America, where farmers have been taught to obtain crops from land which, previously to the application of scientific processes of cultivation, was thought to be absolutely useless. “ In this way large tracts of country, which might otherwise have remained idle for manygenerations to come, have been brought into use. If it had been proposed to spend money in that direction, it would have shown a more statesmanlike grasp of the needs of the community than’ has .been shown by the proposals embodied in the Bounties Bill. I shall, however, have more to say on the subject of bounties when we discuss the Bill in Committee. I wish now to say a few words in regard to the Treasurer’s proposals for the building of lighthouses. The right honorable gentleman wishes to provide for the transfer of the control of lighthouses to the Commonwealth at the earliest possible moment, and has indicated that a large expenditure in the building of new lighthouses should take place in the near future. New lighthouses would cost anything from £.10,000 to £20,000 apiece, and in providing for the ten or a dozen additional lighthouses which the right honorable gentleman thinks will be required within a very short space of time, we must reckon on spending from £100,000 to £200,000. At the very least £100,000 must be provided for, because ten lighthouses at £10,000 each - and I doubt whether buildings containing the latest and most improved lighting appliances could be built for that sum - would cost £100,000. Notwithstanding that the honorable gentleman thinks such an expenditure necessary, and that there must be large expenditure in connexion with military and naval defence, he proposes to continue the practice of returning to the States more than three-fourths of the revenue obtained from duties of Customs and Excise.

Sir John Forrest:

– The Constitution compels us to return any unexpended balance,

Mr JOHNSON:

– But there is no need that there should be such a balance.

Sir John Forrest:

– The honorable member means that he thinks that the Commonwealth should spend it?

Mr JOHNSON:

– Yes; if the expenditure is necessary. “ If it is not necessary, then there is over-taxation. If, as the Treasurer thinks, the works to which he has referred could be carried out later on, why not spend any balance which we may have in commencing them now ? It seems to me that our coastal and harbor defences are being almost entirely neglected by the authorities, and, instead of handing over any balance to the States, we might well expend the money on works necessary to meet the Commonwealth requirements. The Treasurer anticipates that more lighthouses will be needed because of the probable increase in our shipping, but the Government of which he is a member, and the party to which he belongs, have been instrumental in passing legislation whose effect will be to diminish our commerce, and, therefore, our shipping. I refer to the restrictive provisions of the Commerce Act and he Australian Industries Preservation. Bill, for example. The effect of such provisions must be to decrease the volume of our trade, and, consequently, the number of mail and freight steamers coming to Australia from abroad. If that happens, the probability is that in the future, instead of needing more lighthouses, we shall need fewer, because of the decrease of shipping in Australian waters. I should like to know why it is proposed to expend £8,000 in purchasing a trawler. This seems to me the initiation of the socialistic scheme proposed by certain honorable members for the acquisition bv the Commonwealth of a fleet of steamers. Perhaps this is the Treasurer’s way of entering upon that socialistic proposal. I should like to know from him if “the trawler which is to be acquired will form the nucleus of a magnificent fleet of Commonwealth steamers ?

Sir John Forrest:

– A trawler is to be acquired in order to explore our coastal seas, with a view to seeing where fish may best be obtained.

Mr JOHNSON:

– It is well that we should obtain information on this point, because sometimes an innocent item of expenditure means a great deal more than is apparent, and the proposal to expend £8,000 for a trawler may ultimately develop into the acquisition by the Commonwealth, first, of the fishing, fleets on our coasts, and, later, of all means of communication by sea.

Sir John Forrest:

– That is not the intention.

Mr JOHNSON:

– It may not be the present intention, but, later on, the right honorable gentleman may be reminded that his Government initiated Commonwealth owning of steamers by the acquisition of this modest little trawler. Then £10,000 is to be expended iri’ providing for wireless telegraphy. This seems to me a very serious innovation from the Ministerial point of view. It was pointed out by the Minister of Trade and Customs that one of the main reasons for the introduction of the Australian Industries Preservation Bill was the need for preserving our existing industries. I would therefore point out to the Treasurer that the substitution of wireless telegraphy for telegraphy by means of wires would seriously injure a very large number of industries. In the first instance, it would injure .the mining industry, by diminishing the demand for the metals of which wire is made. Next, it would injure the wire-making, industry, because less wire would be required ; and, lastly, it would injure all those industries providing occupation to timber getters, to carriers, to linesmen, and to many others. Therefore, the Commonwealth Government may find itself being brought to book under the provisions of one of its own measures for having taken action interfering with and seriously injuring Australian industries. I merely allude to the fact im passing, to show the Treasurer that he is skating on very thin ice, and that there is no knowing where he may ultimately find himself, if he continues to adopt the latest scientific appliances for telegraphic communication. In connexion with the defence proposals, I should like to know what has been done in regard to the armament of the Fremantle forts?

Sir John Forrest:

– One fort is finished.

Mr JOHNSON:

– When the Estimates were under discussion last year, a very animated debate took place in regard to the armament of these forts, on which it was then proposed to mount 9.4 guns. Some of us contended that smaller guns would be good enough, because the peculiar situation of the fort makes long-range guns unnecessary, if not useless. The original intention was to mount 7.5 guns, and I myself think that 6-inch guns would be quite large enough.

Sir John Forrest:

– I understand that the question is not vet definitely settled.

Mr JOHNSON:

– Then I shall have an opportunity of discussing this matter more fully when the Defence Estimates are under consideration. On the question of defence generally, I may say that I do not object to every provision being made for maintaining our Military Forces at a proper standard, both as regards efficiency and’ equipment. But I think there is a ten.dency, not peculiar to the present Government only, to pay too much attention to our military defences and to neglect the matter of coastal defence. Although we have an unprotected coast line of 8.000 miles, it does not seem to have yet been realized that our first line of defence is the British. Navy, that our next line should take the form of coastal defences, and that the Military Forces, upon the maintenance of which all our energies are sow concentrated, is the element upon which we should have to rely only in the last emergency. I think that we might devote some of the money that we are now handing over to the States, in excess of their three-fourths share of the Customs and’ Excise revenue, to providing coastal and harbor defences. My view of the matter is that we should enter upon the construction of torpedo boats and destroyers, with a view to rendering our more vulnerable harbors safer from attack by the cruisers of any nation with which we might, unfortunately, become embroiled. I see that it is proposed to vote £1,000 towards the expense that will be incurred in sending an Australian rifle team to take part in the contest for the Kolapore Cup at the next Bisley meeting. I should like to know whether it is intended by the Government to send Home a team which will be of a national character, and will properly represent Australia, or whether the riflemen will be permitted to proceed to England as private citizens. If a team is to be sent Home to represent the Commonwealth, it seems to me that the amount of £1,000 will not besufficient.

Sir John Forrest:

– We propose to subsidize private subscriptions £1 for£1 up to , £1,000. That is better than nothing.

Mr JOHNSON:

– Perhaps it is better than nothing, but I maintain that if the team is going Home in a representative capacity, it should not be called upon to pay any portion of its expenses. In view of the fact that we’ have such a large amount of revenue to expend in other directions, we might very well bear the whole of the cost.

Sir John Forrest:

– The team is going Home’ under the auspices of the National Rifle Association, and are being assisted by the Government.

Mr JOHNSON:

– I still think that the Government might very well have borne the whole of the expense. However, if the National Rifle Association is satisfied, I need say no more. The Treasurer referred to the employment of Australians and New Zealanders upon H.M.S. Challenger and other vessels of the Australian Squadron. He said -

At the time that the agreement was under consideration, it was fearedby some that Australians would not accept service in the Navy, but that statement has been controvertedby the fact that already 518 Australians and New Zealanders have been enlisted, and are now doing duty on H.M.S. Challenger and the three drill ships. The Government have had under consideration the recommendations of the Imperial Defence Committee as to the best means of protecting Australia from invasion or aggression.

He also said -

I have been, informed that there are difficulties in the way of training men here for the higher ratings, because there are not in existence in Australia the technical schools necessary to impart the required knowledge; but these difficulties are likely to be overcome by sending men to England for instruction in the same way in which officers are being sent.

I should like to know what obstacle there is in the way of our establishing such schools of instruction here. We could secure the necessary instructors from England.

Sir John Forrest:

– We are told that we cannot.

Mr JOHNSON:

– Surely if sufficient inducement were offered we could obtain the services of the men we require.

Sir John Forrest:

– We are otherwise informed.

Mr JOHNSON:

– I think that some of our surplus revenue might be devoted to the establishment of technical schools for the instruction of naval officers. It is in the highest degree desirable that we should make provision for the training of naval officers and men, because in the very near future we shall have to man our own war vessels. It must be a matter ofvery great satisfaction to every one to know that the trade of the Commonwealth has increased to a very considerable extent. There does not, however, seem to have been a great increase in the volume of our imports.In 1903 our imports were valued at £38,835,682, whereas in 1905 they were valued at only £38,346,731, or a reduction of £488,951. I refer to this matter because recently we were hurriedly called upon to pass a measure which was intended to prevent dumping. We were then told that our markets were being flooded with imported goods and yet it is plainly evident from the figures submitted by the Treasurer that there has been an actual decrease in the imports as compared with 1903. In the face of these returns, what becomes of the allegations as to wholesale dumping which were made to justify the introduction of the Australian Industries Preservation Bill. I merely refer to this matter in passing in order to show how reckless are some of the statements made by the Minister of Trade and Customs and honorable members opposite when they have any particular purpose to serve. When the Bill in question was before us we were unable to obtain information with regard to a single instance of dumping. Now the reason- is clear, because the figures before us afford a complete answer to all the allegations that were made by the Minister cf Trade and Customs, and those who were supporting him. It is interesting to note that two-thirds of the imports into the Commonwealth come from British Possessions. From this it is abundantly clear that the restrictive provisions contained in the Australian Industries Preservation Bill, in the Customs Act and the Commerce Act are directed, not so much against foreign competitors, as against those of our own flesh and blood in other parts of the Empire. That was the view taken by honorable members on this side of the Chamber when the Australian- Industries Preservation Bill was under discussion, and the figures now before us afford the fullest justification for the statements made by them. I notice that it is proposed to vote £500 for the purpose of assisting the people of the New Hebrides. This appears to me to be little short of an insult to the people of our own race who have settled in those islands. I do not intend to enlarge upon this subject, because I have already spoken at length upon it. But I desire to point out that something more than is now proposed is due to those who are endeavouring to establish British influence in the islands. Some time ago inducements were held out to settlers from Australia to establish their homes in the New Hebrides, but almost immediately afterwards we raised Tariff walls which absolutely shut out these men from the only market available for the produce which they are compelled to grow in order to tide them over the period - ranging from seven to ten years - during which their cocoanut trees were becoming sufficiently matured to yield .them some return. They were obliged to cultivate products such as maize, and immediately they did so they found themselves excluded from our markets. Because bv our legislation we have ruined some of them, we now offer the settlers a miserable sop of £500 - an amount which, when distributed amongst them, will represent only a very paltry sum to each individual. It is little short of an insult to make a proposal of that kind, instead of submitting a statesmanlike proposition to remove the barriers which prevent the admission of their products to Australia, and to recognise them as citizens of the Commonwealth. I notice that in the Treasurer’s Budget no mention is made of a progressive land tax. It would be interesting to learn what attitude the Government intend to take up in regard to that matter. Sooner or later they will have to declare themselves, and in view of the fact that the question of the settlement of population upon our soil is a vital one, and that no mention whatever is made of any proposal to grapple with that problem-

Sir John Forrest:

– A good deal has been said about it.

Mr JOHNSON:

– A good deal of noncommittal talk has been indulged in - talk which is of no value to anybody. But the leader of the Labour Party and his followers have certainly made some attempt to grapple with it. Their proposal is bound to end in a fiasco, and certainly it is one which does not commend itself, to my sense of justice. At the same time, I must credit them with having made 4a proposal, even though a crude and unsuitable one. The Treasurer himself will admit that the crying need of Australia to-day is population - more especially a rural population. I could submit certain proposals to the right honorable gentleman if he would only act upon them. It is a problem which does not present any difficulties to me.

Sir John Forrest:

– I should like to hear the honorable member’s proposals.

Mr JOHNSON:

– I should be very pleased to provide a solution of the problem for the Treasurer if he would only give effect to my suggestions. If he is really desirous of having some practical scheme formulated which will bring about the desired result, I shall be only too happy to have a conference with him upon the subject.

Mr Maloney:

– The honorable member would propose the adoption of the single tax.

Mr JOHNSON:

– Yes.

Mr Carpenter:

– I thought it would be something which is impracticable.

Mr JOHNSON:

– My proposals would be practicable, and based upon, the principle of justice - a principle which cannot be claimed to underlie the progressive land tax proposals of the party with which the honorable member for Fremantle is associated. I have spoken at greater length than I had intended, although I do not think that I have occupied the attention of honorable members for an undue period, in view of the importance of the Budget statement, and the multiplicity of subjects it embraces. Whilst we must all find cause for gratification in the healthy condition of trade, industry, and finance, we must admit that there is room for improvement in many directions, and that the practice of returning to the States the balances in excess of the three. fourths of the Customs and Excise revenue to which they are entitled under the Constitution should not be continued. These balances, during the past six and a half years, have aggregated £5,233,000. The Treasurer himself has shown that that money might be profitably used upon imperative Commonwealth needs. I would suggest that in future, instead of these balances being returned to the States, they should be spent in perfecting those coastal and harbor defences in the advantages of which the States would participate, both individually and collectively. I have just been reminded that I have omitted to say anything in reference to the conversion of the States debts, and the several schemes which have been propounded for dealing with them. . I am sorry that I neglected to deal with this question in the earlier portion of ray speech ; but I do not think that I shall now trespass upon the patience of honorable members further than to say that, in my opinion, some serious attempt ought to be made to finally settle this question during the currency of the present Parliament. If we indorsed the Treasurer’s proposals, I fear that our decision might be absolutely reversed bv a succeeding Parliament.

Mr Watson:

– I hope so.

Mr JOHNSON:

– In that connexion I may say that the criticism which was offered last night by the honorable member for Bland commends itself in many respects to my judgment.

Sir John Forrest:

– What did he say?

Mr JOHNSON:

– The Treasurer was present, and heard what the honorable member had .to say. I shall not enter upon the matter now, because, at a later stage, when concrete proposals are under consideration, I shall have an opportunity of fully expressing my views upon the question.

Mr KING O’MALLEY:
Darwin

– I wish to congratulate the Treasurer upon his second Budget speech in this

Parliament, and upon his thirteenth financial statement in Australia. It is quite true that there is very little room for the Commonwealth Treasurer to display any genius as a financier. He is hedged, hobbled, and bound by the Constitution, including the Braddon blot. He may handle and examine three-fourths of the Customs and Excise revenue of the Commonwealth, but he must not touch it. Whilst he maytalk much about it he can do very little with it. Under sections 87 and 89 of the Constitution the unexpended balances must be handed back to the States every month, so that the Commonwealth Treasurer has no power to be generous. He cannot dangle before the electors great possibilities in the way of conferring certain favours upon constituencies. But, taking it all in all, there is no doubt that the present Treasurer made the very best possible use of his opportunities. He presented a Budget which was packed with statistical plums gathered from the fruitful orchards of the whole Empire. He placed them before us, not only for the benefit of honorable members, but for the benefit of the Empire. I should like to see the right honorable gentleman made the first Treasurer of the Federated British Empire, so that he would have an opportunity to give play to his hopeful ideas. The practice of always looking upon the black side of everything is, to my mind, a reprehensible one. There is sufficient gloom in the world without the Treasurer of the Commonwealth increasing it. I have given a good deal of attention to the proposals submitted by the honorable member for Mernda in regard to the taking over of the States debts. I have also looked east, west, north, and south upon the propositions made bv the Treasurer himself, and I must confess that, unless both of these gentlemen are philanthropists, or are engaged in dispensing Commonwealth charity, I can see no earthly reason - viewing the matter from a cold-blooded business stand-point - why the people of Australia should take over one shilling of those debts, except as the States request them to do so - except as they mature, and as the people themselves * can benefit by their conversion. What is the reason for the wonderful sympathy exhibited by honorable members with the bondholders, shareholders, and debentureholders of Europe? Did the latter invest “their money in Austraiian securities because of any special love which they had for this country ? If they could have obtained a better security from the United States, from Canada, from the Argentine Republic, or from Chili, Paraguay, Uruguay, or China, would they not have accepted it? The Australian States went into the money market and borrowed in the open exchange. Honorable members whose hearts go out to the bond-holders in Europe who have the best lawyers and the best investors in the world to advise them, fail to remember the struggling masses in the tropics of Queensland, in the back-blocks of New South Wales, and deep down in the mines of Western Australia and Tasmania, who produce the wealth with which to pay interestupon these bonds. Unless we are to be actuated purely by philanthropic motives, we should carefully and conscientiously consider the question before we determine to bind the Commonwealth under a legal lien to take over a liability of £236,680,139, with no guaranteethattheStates,assoonastheyare thus relieved, will not again rush into themarket anddoubletheirexistingindebtedness.Iwasgladtohearthedeputy leader of the Opposition point out that as soon as the States were relieved of their responsibility in this way they might be disposed to raise further loans. Let us consider for a moment what would be the tactics of a clever candidate for election to one of the Parliaments of the States. He would naturally dangle before the people some alluring proposal ; he might promise to support the construction of a railway to some out-of-the-way place, or some extensive public work that would not be reproductive: and if he were returned with a majority he would at once go into the London market and float a loan on behalf of his State. Other States might follow that example, with the result that in ten or twenty years they would have a further indebtedness of perhaps £200,000,000. Would the Commonwealth be prepared to again rush in and take over further liabilities thus incurred ? There ought to be reason in all things. I have looked into this question. and find that the States of the Commonwealth have issued debentures, Treasury bills, bonds, and stocks of various kinds, representing £49,267,400 at 3 per cent. On turning to the Times. I find that the average price of this 3 per cent.stock is as follows: - New South Wales- maturing twenty-nine years hence - £88 10s. ; Queensland - maturing in some cases fifteen years hence, and in others at a still later period - £87 10s. ; South Australian, £87 ; Tasmanian, £85 ; Victorian, £87 10s. ; and Western Australian - maturing between 1915 and 1935- £88 10s. The Melbourne newspapers show that these stocks can be bought here at £90, and these figures give an average price of £88. We have been told that we must arrive at a sound businesslike proposition, and, having regard to that fact, it seems to me that the Commonwealth should take over these stocks only at the price at which a private investor would purchase them.

Sir John Forrest:

– The States have to pay.

Mr KING O’MALLEY:

– I desire to be absolutely fair. On the one hand, we have the investor, with his eyes open to business, and on the other we have the people who pay. I understand that it is the desire of honorable members that this question should be fully discussed, and, that being so, I wish to put before the House what little knowledge I possess with reference to it. I am sure that we desire a full interchange of views, so that we may extract the plums of wisdom from the proposals that are submitted to us. A prominent accountant today checked with me the figures that I am now about to put before the House. I find that if the Commonwealth were to buy these 3 per cent. stocks at the price at which they are to-day quoted in London and Australia, it would save the people no less than £5,912,088. In other words, we should save the miners and the farmers - in short, the people who must pay the interest on these debts - this immense sum, notby swindling or begging, but by a fair business transaction. I have not yet considered what would be the positionin regard to the other stocks; but I would point out that if the sum of £5,912,088 so saved were invested at 3 per cent., the Commonwealth would gain £177,362 per annum for all time. Canada goes into the market and purchases her own stock. If the Commonwealth takes over the debts of the States, or guarantees to take them over as fast as they mature, it will be at the mercy of speculators, brokers, and money mongers, and we shall mortgage the heritage of the people of Australia, not for . £236,680,730, but for £8,488,669 per annum. That is the amount which must be paid away annually in respect of interest, whether we have bad seasons or good seasons, droughts, grasshoppers, or the codlin moth. I do not desire to prosper on the misfortune pf my country ; but many of the men who are prepared to lend money to Australia have no hesitation in making us pay very heavily for it, especially when better terms are offered to South Africa. In this connexion, I would remind honorable members of the position in which Mr. Irvine was placed when, shortly before retiring from office as Premier of Victoria, he had to float a conversion loan. The money-lenders with whom Victoria had then to treat were certainly not philanthropists. They had no hesitation in telling Mr. Irvine that he would have to pay, and he had to do so. Notwithstanding these facts, the Treasurer and the honorable member for Mernda are prepared to acquiesce in a proposal that the Commonwealth should guarantee to take oyer the debts of the States as they approach maturity. As soon as we have given that guarantee, how shall we be able to negotiate? When we suffer from a drought, and the sheep die on the plains, the Labour Party mav be blamed-

Mr Webster:

– It has been blamed for such things.

Mr Maloney:

– And will be so blamed again.

Mr KING O’MALLEY:

– I admit that we ought “to assume the indebtedness of the States in respect of the interest payable on the transferred properties. So far as that question is concerned, we are not dealing honestly with the States. It is true that the Treasurer has handed back to them a sum of £5,233,591 in excess of the threefourths of Customs and Excise revenue to which they are entitled. But had we taken over these properties, which have an estimated value of from £10.000,000 to £11,000,000, six years ago, we should have had to pay to the States by way of interest £385,000 per annum, so that, allowing for that liability, the Treasurer has really returned to the States only £^2,923, 591 in excess of the three-fourths of Customs and Excise revenue to which they are entitled. What are these properties? They consist of telegraph offices, including telegraph and telephone lines, and instruments, and stores, Customs-houses, drill halls, forts and other buildings, gun boats, guns, ammunition., and supplies generally estimated to be worth between £10,000,000 and £11,000,000. On the sums expended in the purchase or erection of these properties the States have been paying interest for the past six years, and are still doing so, although the Commonwealth has been in possession of them, and has used whatever income they have produced. Estimating the amount of interest paid at 3J per cent. - the annual payment amounts to £385,000, although the average rate of interest, as was shown by the honorable member for Mernda last night is more than that, being about ,£3 12s. 2d., so that the payments have been still larger. Therefore, during the six years the States have paid in interest on. properties held by the Commonwealth £2,310,000, while they have received back £5,233,591, so that the actual sum they have received is only the difference between these amounts or a sum of £2,923,591. Where then is the wonderful generosity of theTreasurer? It is all very well to be generous with another’s property ; but where is the evidence of the wondrous, boundless, Continental benevolence of which, we have heard. The Commonwealth should pay for the properties which have been, transferred to it by the States. But the States have never begged us to take over their debts. Why should we act as accountants and caretakers for them? It seems to me absolutely preposterous that the Commonwealth should take over thedebts of the States unless it is in a position to float loans at par. London is themoney centre of the earth, and it may happen that Australia will require £4,000,000, or £5,000,000, or £10,000,000 when times are bad in England, and interest high, and! loans are being applied for by Canada, South Africa, and India. If the Commonwealth were not saddled with the whole of thedebts of the States, the money required’ could probably be borrowed at 3 per cent, in Australia from our own people, and’ when stocks were depressed in London wecould authorize our High Commissionerthere to go into the market for the protection of our interests, as is done in connexion with the public debts of Canada, the United States of America, and other countries where businesslike methods prevail. Our bondholders in Europe must not be led to expect different treatment from the people of Australia thanthat given to debenture and stockholders generally. I am absolutely- opposed to the Commonwealth taking over any portion of the debts of the States, except as they mature, and it can make terms with those who have put money into Australian stocks and bonds. I admit that it is very unpopular not to be with the crowd who clamour for the taking over of the debts; but the great thing is to feel that one is in the right, and I feel that on this question I am absolutely right. I do not see why the Commonwealth should make a gift of £5,912,088 to those to whom we have so long been paying interest on £49,267,400 worth of 3 per cent. bonds in England and in Australia. To my utter amazement, I have discovered that, according to Coghlan, only £16,000,000 of the amount borrowed by Australia has come to this country.

Mr Bamford:

– That is in hard cash.

Mr KING O’MALLEY:

– Yes.

Mr Bamford:

– We got shoddy for the rest.

Mr KING O’MALLEY:

– The rest has been paid away in interest. When we float a loan in England, the money does not come to Australia, though the effect is to enable companies having offices in London to sell their Australian properties at advanced prices, and to enable speculative shipments of goods to be sold here. What Australia gets for her loans is chiefly the shoddy that comes oversea. I have had some calculations made in regard to the payments made by the States in connexion with their debts. . The aggregate amount annually paid in interest is £8,488,669, which in sixty years would amount to £509,320,000, while the debt would still remain. In twenty-one yearswe should pay in compound interest the full amount of our debts - £236,680,39 - and in fortythree years that amount three times over, or £710,042,317, while the debts would still remain. I give these figures to show that the great financiers of the past have placed the people of Australia under an ironclad mortgage, and that they are now being ground under theheel of the European money-mongers. In sixty years the interest on our debts, if allowed to accumulate at 3 per cent., will amount to £1,384,106,680. while we shall still owe the original £236,680,739. In other words, our obligation in the way of interest, in addition to the obligation under the existing debts will be more than the properties of Australasia, including

New Zealand, are valued at, and those in 1903 were worth £1,204,042,000. Therefore, if this country discontinued the payment of interest on its debts, semiannually, at the end of sixty years it would owe more than the present value of ail the property and improvements in Australasia. The six States of Australasia have, floating in the Commonwealth, 3 per cent. debentures, Treasury notes, or bonds to the value of £15,744,381, and, in London, to the value of £33,523,019. If we wish to be sensible, reasonable, and just to the struggling masses who have to earn the money necessary to pay interest on this debt, we shall not place the Commonwealth guarantee on the back of any debenture, bond, or other stock certificate, binding them for all time, and preventing them from taking advantage of a cheap money market here or elsewhere. Look at what the Victorian Premier is doing to-day. He is Richard Seddon the second. A few ‘years ago the financiers of Europe thought that they could charge any price they liked for their money. Money is of no use except you can get rid of it. It is of no value in one’s pocket. In order to get value for it, it must be spent. Today Mr. Bent is stepping into the markets of Victoria and’ is prepared to liquidate the English obligations of the State with money obtained from local financiers. He is thus keeping the interest in Australia. There is a vast difference between paying interest on loans to Australians who will spend their money with the merchants and shopkeepers and the producers of the country, and handing it over to the financiers of Europe.

Mr Wilks:

– Even the honorable member’s country rushes to Europe.

Mr KING O’MALLEY:

– I admit that my country has been rushing to Europe for the last thirty or forty years; this is my country - Australia. I have compiled some figures with a view to indicating the earning power of £200 in sixtyyears. My own impression is that no country ought to pay more than 2 per cent. interest upon its loans. In sixty years, £200 at1 per cent., becomes worth £363; at 2 per cent. £656; at 3 per cent., £1,178 ; at 4 per cent., £2,102; at 5 per cent, £3,735.: at 6 percent, £6.597; at 7 per cent. £11,589; at 8 per cent, £20,251; at 9 per cent, £35,206; and at 10 per cent., £60,896. These figures show why povertyprevails throughout the world - why the vast multitude of people who pay interest are in poverty. I have been through the crusher,and I know something about it. I often used to wonder why it was that when I was paying interest I was growing poorer, whilst those who had lent me money were growing richer. My ideas upon the question of Australian finance are as much entitled to receive attention as are those of other honorable members who are not scientific financiers. . 1. must confess that up to the present, I have not heard of any exceptionally scientific financiers in Australia. It is very easy for any one to rush in and borrow money, but it must not be forgotten that there is always a day of reckoning. When that day arrives, you begin to see the folly of borrowing. I have made a special investigation of the expenses connected with the flotation of loans. I find that we have to pay about per cent. for underwriting the loans. We also have to pay21/2 per cent. for brokerage. Then again, we have to make an allowance for discounts and other expenses, which, added to the brokerage and underwriting charges, bring up the total cost to about 8 per cent. I venture to say that of the £236,000,000 which represents the total indebtedness of the States, £20,000,000 was paid for discount, brokerage, and underwriting. Therefore, we are being called upon to pay interest, not only upon the legitimate debt, but also upon the incidental expenses.

Mr Wilks:

– What about the charges made by the banks for paying the interest to bond-holders?

Mr KING O’MALLEY:

– They are not included in my calculations, and I venture to say that I am not very far out in stating that our stocks have been watered to the extent of about £20,000,000. The fact that we have to pay upon this vast sum of money interest at the rate of 3.61 per cent., or £3 12s. 2d., is of sufficient magnitude to induce us to consider whether we should not take advantage of every opportunity to lighten the burden of the taxpayer. We should follow the example of our brethren in Canada. They go into the market and back up their ownstocks by buying them. The Commonwealth could do the same thing, if it were not saddled with the whole of the indebtedness of the States. If times were bad in one country, they might be good in another. We could go to America, Japan, or France, if money were cheap in their markets, and borrow upon the security of Commonwealth bonds, and buy up the States stocks in

London. Last year I brought forward a scheme which was looked upon as Utopian. I am now going to make further reference to it. I suggested that the Commonwealth should borrow its first £500,000 for the purpose of erecting a Commonwealth building of steel in the heart of London. This would be one of the soundest investments that could be made by the Commonwealth, and I believe that honorable members, after sleeping upon my proposition for a few years, will come to the conclusion that it is sound. Ten years ago, I introduced into the South Australian Parliament, a motion designed to prevent men from leaving their wives, and families destitute. I had a terriblebattle, extending over three years, before I succeeded in carrying the motion ; even when I did carry it, it was, in spite of the opposition of the right honorable and learned member for Adelaide, and others. Now Mr. Mackinnon has introduced it into the Victorian Parliament, and Mr. Bent, a progressive Premier, has made it a Government measure. I feel proud of that fact, especially as the proposal was ridiculed at the period to which I refer. The fact of the matter is that projects which were regarded as fads tenyears ago are today concrete proposals. My suggestion has reference to the representation of the Commonwealth in London. Take the various States of America as an example. They have buildings in the cities of Philadelphia and New York. In those buildings they exhibit samples of all their produce. Similarly the Commonwealth must establish an office in London, and the sooner it does so the better. It must appoint a High Commissioner, and the sooner it does that the better. I claim that for £500,000 we could purchase the necessary ground, and erect the building, not far from the Bank of England. The structure should be ten or twelve stories high. The basement should be reserved for Australian wines, spirits, &c. The next floor might be let as offices for insurance companies and various other mercantile institutions. Upon the next floor we might establish a restaurant, in which only Australian produce should be sold. The top story might very well be utilized as a show-room by the six States of Australia, and the New Zealand Government would willingly establish its offices there. As each of the States intends to maintain a representative in London, every one of those representatives might have art office in the building, and the Commonwealth might also have its own offices, and its own bank there. London is a great city. It is the centre of the earth, and a structure such as I suggest, erected there, would be the pride of the Commonwealth. The High Commissioner will perform different functions from those discharged by the representatives of the States. All the rotten financing which is now done through the banks - I call it “ debauchery “ financing - would be dispensed with, and the work which is now performed by those institutions would be done by the High Commissioner. The latter should have with him what is known as a “credit” man, whose business it would be to hunt up the investors in Australian stocks. I do not saythat the gentlemen at the head of the banks in London are not above suspicion, but I do maintain that they have the interests of their clients at heart’. It is not their business to look after the interests of Australia, but to conserve the interests of those who buy Australian bonds. At the present time, with the exception of South Australia, the warrants for the payment of interest by the various States of the Commonwealth pass through the banks, and not through the hands of the Agents-General. The latter do not know the name of a single investor in Australian stocks. But the banks know them. Is that satisfactory financing? I tell honorable members that if I had reared a boy who was fifteen years of age. and he possessed such ideas of finance, I would ask some doctor to suffocate him with opium. Under our existing system of financing, it is no wonder that Australian stock has been well watered and discounted. The banks, in looking after the interests of their clients - perhaps a trust company or an investment company - may advise them to hold back a while, in order to obtain a higher rate of interest. Under existing conditions they have merely to hold back a loan for a month or two to induce the Treasurer to increase the rate of interest. He may increase it by one-half, or oneeighth, or, perhaps, by only one-sixteenth, per cent., but we .must recollect that the people of Australia have to pay that amount. If the office of the High Commissioner were established in our own buildings in London, he would be able to inscribe our own stock, so that any man possessed of a five-pound note would be able to purchase over the counter an’ Australian consol bearing interest at 3 per cent.

But I would go further that that. I would receive money upon deposit at the High Commissioner’s office - money which could be utilized in Australia. All our experience is based upon the country in which we live. If we have lived in a small country our ideas are small and parochial, and vice versa. I know something about the price of real estate, and of the rents which it ought to produce, and I claim that we can borrow £500,000 for 3 per cent. - in other words, for £15,000 annually. I further maintain that we can derive 6 per cent, interest upon our investment in a property such as I have outlined. As a matter of fact, I do not know of a single property held by the institution with which I have for years been associated - in any city where it has purchased wisely - which does not return interest at the rate of per cent. Our income, therefore, would be £32,500. Against that, I have set down £2,500 for upkeep and insurance, although I do not see any reason why the Commonwealth should not insure its own buildings. Surely it is as strong as any insurance company. 1 have also provided for a sinking fund of 2 per cent. , because I do not believe in perpetuating the borrowing policy. The sinking fund would amount to £10,000, the interest at 3 per cent, would represent £15,000, and the upkeep and insurance £2,500. Thus there would be a total expenditure of £27,500, so that we should still have £5,000 to pay rates and taxes and cover any loss which might he incurred by reason of offices being vacant. I do not know what rates and taxes are imposed in London, but upon the basis of the amount which is paid in Melbourne, they would represent about £1,000 or £T.-5°° a year. Thus we should have our own building in the metropolis of the world, the various States offices would be grouped at one centre, and Australia would receive an advertisement for all time. Then whenever a man visited London, and was asked to view the building of the Commonwealth there, it would mean something to him. When I came to Australia the institution with which I was connected had ample funds on deposit with tHe banks, but possessed no buildings in Australia. Subsequently it erected buildings in Melbourne and Sydney, and since then all doubts about its assets in Australia passed away. Upon the erection of those buildings the people recognised that the company had substantial assets in Australia, and that would be our position in England if my suggestion were adopted. It is worthy of the consideration of honorable members. Hundreds of Australians are constantly travelling, and in the great building which I suggest should be erected in London we should have an Australasian club which would be the head-quarters of Australians in England, who would naturally take an interest in the affairs of the Commonwealth. Years ago, various banking institutions in Australasia used to receive deposits from English investors, but since 1893 the latter seem to have lost confidence in them. Millions which had been invested here by people in the old country were called in or lost, and the money has never returned to Australia. If the Commanwealth were to receive the money the position would be altogether different. The people would know that it was not going into the hands of speculators to be used for their own private interest ;they would know that, although individuals might come and go, the Commonwealth would live for ever. It has been said during the debate that the legislation of the Labour Party might have a prejudicial effect on money-lenders. Have we reached such a stage that it is necessary for an honorable member, before speaking in this Chamber, to send a cablegram to London inquiring what are the views of the gamblers on the Stock Exchange? If we have, then we are living not in a democratic country, but in a despotism worse than that of Russia under the Czar, and with the Duma abolished. I shall now refer briefly to the position of the sinking funds established by the States in connexion with their various loans. As the result largely of the action of the right honorable member for Swan, when Treasurer of Western Australia, that State has a substantial sinking fund, but the sinking funds of the other States appear, mosquito-like, to have flown away. The exact position of these funds is shown in the Budget papers. I find that NewSouth Wales, with an indebtedness of about £82,000,000. has a sinking fund of £439,033, that Victoria has a sinking fund amounting to £298,579, whilst Queensland’s sinking fund amounts to , £68. South Australia has a sinking fund of £144,601, whilst Western Australia, which has made absolute provision for the discharge of her comparatively small indebtedness, has a sinking fund of £1,112,652.

The total amount to the credit of the sinking funds is £2,209,104.

Sir John Forrest:

– We have a 3 per cent. sinking fund in respect of the Coolgardie waterworks loan.

Mr KING O’MALLEY:

– That is so. Tasmania has a sinking fund of £214,171. Do these figures disclose anything in the shape of true financing? The indebtedness of the States amounts to £236,000,000, and the only one that has made any substantial provision by way of a sinking fund is Western Australia. All honour to the right honorable the Treasurer, who, when Treasurer of Western Australia, had the good sense to take a different course from that pursued by the Treasurers of the other States. ‘The following particulars illustrate my remarks concerning our indebtedness and trade: -

Public debts at 30th June, 1905, per head of population as at 31st December, 1905 : - New South Wales, . £55.185; Victoria, , £46.625; Queensland, £80,079; South Australia,£76,079; Western Australia, £66,773; Tasmania, . £52,301. -Total, £58.404.

Oversea trade of Commonwealth : - 1903. - Imports, £37,811,471; exports, £48,170,164; total, £85,981,635, 1904. - Imports, £37,020,842 ; exports, £57,489,216; total, £94,510,058. 1905. -Imports, £38,346,731; exports, £56,841,035; total, £95,187,766.

Sir John Forrest:

– I did not begin the practice to which the honorable member referred just now. It was initiated in the Crown Colony days.

Sitting suspended from 6.28 to 7.30 p.m.

Mr KING O’MALLEY:

– I desire now to draw the attention of honorable members to the military expenditure of this country. I find that in 1901-2 our military expenditure was £807,897 ; in 1902-3, £712,290; in 1903-4, . £742,522;in 1904-5, £734,339; and in 1905-6, £798,431 ; while the estimated expenditure for the current financial year, 1906-7, is £876,078, of which, no doubt, a good deal has already been spent. These sums total £4,671,557. It is a serious matter for 4,000,000 of people to have spent that large sum upon militarism in a period of six years. No doubt we have got for it a, certain quantity of feathers and glory ; but what the country requires is population. We desire to encourage the immigration of white men. The Commonwealth has been unable to give back to the States money for the promotion of closer settlement, because of this immense sum which it has wastedin inviting the nations of the world to come and fight us. Militarism wastes a people’s wealth; it depresses ‘ the great masses ; it withdraws capital from reproductive works ; and sinks it in desolate, non-productive monuments of human folly. Militarism paralyzes industry, wastes property, and mildews economic progress. I wish to enter my protest against this waste of the money of the people on a military circus. Does any man possessing reason and judgment believe that if a great nation like Japan wished’ to conquer this country it would hesitate to attack us because of the 4,000,000 people here? Would it hesitate if it were not afraid of the British nation? We are reaching a period of history when the nations of the world, instead of building forts to keep other people out. are encouraging them to come in. They are endeavouring, in every way they can think of, to obtain healthy, vigorous immigrants, knowing that if the immigrants harmonize with their people, and if the nation is capable of absorbing and digesting them, they will each be worth from £200 to £300, as the late right Honorable Richard Seddon said at the Labour banquet, the last public function which he attended before his death. If the money which we have wasted on militarism had been spent in encouraging immigration and closer settlement, by the undertaking of water conservation in the interior, and other public works, we should have settled here a great army of Europeans, men of indomitable pluck. I find that the expenditure of . £4,67:1,557 would have enabled us to settle on the land at least 10,000 able-bodied men, giving them 100 acres each. To each of these 10,000 ablebodied men might be allowed a family of five, making a population of 50,000 souls. That result might have been brought about ifwe had not wasted the money on glory, on arsenals, and forts, on gun-boats, and ammunition ; on institutions that produce no flour, and bake no bread. We have spent it merely in supporting men who are utterly useless according to the laws of economics- nice enough gentlemen in themselves, but not needed here, because we have no fighting to do.If they were sent into New South Wales to shoot the rabbits which threaten to eat out the squatters there, they would be usefully employed. I am willing that a few thousand pounds should be spent annually in maintaining rifle clubs, and, if we do not wish, to maintain a navy of our own, I am agreeable to making a contribution towards the maintenance here of ships of the British Navy. Not only could we have given 10,000 able-bodied men 100 acres each, valuing the land at £4 per acre, but . we could have given them, over and above, £671,557. These men and their families would produce wealth for the Commonwealth; they would have goods to transport by our railways;they would purchase the products of our factories ; they would purchase the Age, the Argus, and the Herald, if settled in Victoria, and would pay through the Customs £110,000 per annum. Everybody in Australia would benefit by the expenditure, in the way I have suggested, of the £4,671,557 which we have wasted on militarism. Even if war did occur, we should not be in a position to defend ourselves, because our guns and gun-boats would be obsolete, and we should not be in a financial position to provide modern armaments. In this connexion, the following newspaper abstract is worthy of the attention of honorable members -

ENGLISH ARMY IS CALLED ABIG SHAM.

Disgusted Peer Declares there are not Sixty Up-to-Date Guns in Britain.

Government Admits It.

Secretary for the War Office says the Island has really noand defence.

London, May 14.- In the House of Louis today the Earl of Wemyss and March, Conservative, called attention to the question of home defence.

He asserted that the country was practically without an army, and that there were not sixty up-to-date guns in the Country. The question, he said, would he solved if the Government had the courage to adopt the system of compulsory service at home and voluntary service abroad.

The Earl of Portsmouth, Parliamentary Secretary for the War Office, replying, said the Government had a mobilization scheme under which it was hoped it could mobilize its forces for defence as quickly as any Continental power. Further schemes had been prepared for the defence of British ports, which the speaker confidently anticipated would be placed in a position to resist any sudden attack.

In these schemes the Admiralty, theFarl of Portsmouth said, full concurred. He reaffirmed the principle that the country must look to the navy and not to the army for its defence against invasion.

Great Britain has spent millions upon her army, and yet she has not now sixty guns fit to shoot with. All the others have become obsolete and useless. All these things pass away, Machine guns have only a few years of usefulness, and. then they must be thrown on the scrapheap. But is not the position of old England a lesson for us, a peaceful commercial nation ? Should we not discontinue our nonsensical attempts to maintain an army in Australia?

Mr Johnson:

– What would we do if hordes of Russians came here ?

Mr KING O’MALLEY:

– The poor Czar has enough to do at home without bothering about us. Are we not a Christian people? Let me read what the Reverend Theodore Parker, Minister of the Twenty Eighth Congregational Society at Boston, U.S.A., said on this subject -

A man who has grown up lo read the Older Testament of God revealed in the beauty of the universe, and to feel the goodness of God therein set forth, sees him not as force only, or in chief, but as love. He worships “in love the God of goodness and of peace. Such is the prevalent character ascribed to God in the New Testament, except in the book of “ Revelation.” He is the “God of love and peace,” “our Father,” “kind to the unthankful and the unmerciful.” In one word, Goc! is love. He loves us all, Jew and Gentile, bond and free. All ar? His children, each of priceless value in His sight. He is no God of battles; no Lord of hosts ; no man of war. He has no sword nor arrows; He does not water the ea’rth nor melt the mountains in blood, but He maketh His sun to rise on the evil and on the good, an/I sendeth rain on the just and the unjust.” He has no garments dyed in blood ; curses no man for refusing to fight. . . . War is in utter violation of Christianity. If war be right, th-“ Christianity is wrong, false, a lie. Hut if Christianity be true, if reason, conscience, the religious sense, the highest faculties of man, are to be trusted, then war is the wrong, the falsehood, the lie.

We have men in this count ry who call themselves Christians, and who are constantly talking about fighting some one. Mr. Elihu Root, speaking recently at Rio de Janeiro, the capital of Brazil, declared that in a few years all the South. American Republics would join the Hague Peace Conference, and would settle all their differences by arbitration. If nations engage in war thev must ultimately resort to arbitration. After the great war between Russia; and Japan, arbitration had to be resorted to. If a nation exhausts its wealth in providing arsenals, accoutrements, ammunition, gunboats, which soon become antiquated, and other war material that must ultimately go on the scrap heap, it will have no resources left when the time for fighting arrives. If the money now wasted in military folly were devoted to settling people on the land, we should within twenty-five or thirty years have 8,000,000 or 10,000,000 people here, and would be able to reduce our per capita indebtedness. Our power would be increased to such an extent that no foreign nation would dream of attacking us.

Mr Johnson:

– We can best secure peace by being prepared for war.

Mr KING O’MALLEY:

– Our security lies in the fact that we belong to the Empire. If we have any money to spend we should not waste it upon an army. If any hostile nation wished to invade Australia, the forts at the entrances to our harbors would not stop them. The forts at Port Arthur did not finally exclude the Japanese. Some of the strongest of fortified cities in Europe, such as Vienna, Buda-Pesth, Paris, and Berlin, have fallen before invading armies. Napoleon marched into Berlin, and the Emperor William the First of Germany, marched into Pari?, notwithstanding the millions that had been spent in fortifying that city. In Europe there are cities, the fortifications of which Have cost more money than all the churches, the warehouses, and the homes of the people within their walls. I enter mv strongest protest against wasteful expenditure upon so-called defences. I know that I am almost like a dog barking at the sun when I raise my voice against those people who have gone mad upon militarism. They are suffering from a species of nostalgia which renders them blind to all reason. They are making a fad of militarism to such an extent that some day the general with his spurs and his feathers and his glory knot on his shoulder will take possession of the country. The soldier does not weave his own glory knot, hammer out his own sword, make his own guns, or make his own boots. He is the most useless creature one can imagine. For many years the United States did not spend any money upon an army, and vet when the time came they were able to fight, because thev had the necessary resources. England conquered Europe because she was able to supply the smaller nations with money, and they in their turn were able to provide the fighting men. Now to turn to another subject, I do not notice any reference by the Treasurer to the subject of old-age pensions. One of the finest: reports ever submitted to any people was that presented bv the Royal Commission on Old-age Pensions. We have within the Commonwealth 66,000 or 67,000 people who are denied the advantage of an allowance sufficient to furnish them with the necessaries of life in their old age. In Victoria, the right honorable member for Balaclava introduced the oldage pensions system, and his action in that regard will stand to his everlasting credit. The Minister of Trade and Customs did the same thing in New South Wales. But; there is no provision for old-age pensions in Tasmania, South Australia, Queensland, or Western Australia. In those States they have citizens who have done valuable work in pioneering, and who have been capable and praiseworthy soldiers in the army of industry, and yet no attempt has been made to provide them with a little comfort in their old age.

Mr Tudor:

– In connexion with the introduction of the penny postage system it is proposed to sacrifice money that could, with greater advantage, be devoted to the payment: of old-age pensions.

Mr KING O’MALLEY:

– I do not condemn the proposal for the introduction of penny postage, because it is based on progress, and I am always behind those who show that they are ready to advance. Some people say that we are not ready for such a re-form, but I ask: “When is the day?” To-day is my day, because I may be dead to-morrow. I am grieved that the Treasurer did not openly tackle the question of old-age pensions. I pointed out to him how simply he might arrange matters with the Spates. The Premiers of New South Wales and Victoria are willing to hand over their old-age pension systems to the Commonwealth, and to thus make available between £700,000 and £800.000 per annum.

Sir John Forrest:

– Will they give us the money that thev now pay to old-age’ pensioners ?

Mr KING O’MALLEY:

– They would permit the Treasurer to retain that sum out of their share of the Customs and Excise revenue.

Sir John Forrest:

– I never heard that stated before.

Mr KING O’MALLEY:

– When the right honorable member for East Sydney attended the Hobart Conference he put the position before the Premiers of the States, and the representatives of Victoria, New South Wales, and Western Australia approved of the imposition of duties upon tea and kerosene with a view to providing funds for the payment of old-age pensions. I am content that such duties should be levied for that purpose.

Mr Johnson:

– I am not, because we should have to raise £4 for every £1 that we require.

Mr KING O’MALLEY:

– The honorable member is labouring under a delusion. The States could pass enabling Acts to permit the Commonwealth Treasurer to retain the money realized bv the duties.

Mr Johnson:

– They could not go behind the Constitution.

Mr KING O’MALLEY:

– There is nothing to prevent the States from agreeing that certain revenue shall be ear-marked for the purpose of paying old-age pensions.

Mr Johnson:

– That would have to be done with, the approval of the .majority of the people of the States.

Mr KING O’MALLEY:

– But the Parliaments represent the people of the States.

Mr Johnson:

– That would not be sufficient for the purposes of the Constitution.

Mr KING O’MALLEY:

– I understand the Constitution perfectly well. I helped to make it by advocating its adoption in South Australia and Western Australia. I made a speech in Western Australia in favour of the Federal Constitution long before the Treasurer did.

Mr Thomas:

– The honorable member is on a good wicket when he advocates the payment of old-age pensions, but he is wrong when he talks about imposing duties upon tea and kerosene.

Mr KING O’MALLEY:

– I should be willing to’ impose duties on those articles for the present, with a view to remitting them later on.

Mr Thomas:

– It would be better to raise the money by means of a tax upon land values.

Mr KING O’MALLEY:

– I am in favour of a proposal of that kind. The Treasurer has said nothing with regard to a progressive or graduated land tax such as has been advocated by the democratic section of this House.

Sir John Forrest:

– I am not in accord with it.

Mr KING O’MALLEY:

– If the- Treasurer had adopted the proposal of the democratic party, the whole position would have been simplified, so far as the payment of old-age pensions is concerned. It is suggested that a tax should be imposed upon unimproved values, but that land up to the value of ,£5,000 should be exempted. Upon land the unimproved value of which is over £5,000, but not more than £10,000, the tax would be a halfpenny in the pound ; upon estates the value of which is over £10,000, but does mot exceed £15,000, ‘it would be a penny ; upon land the unimproved value of which is between £15,000 and 420,000, it would be a penny halfpenny ; upon estates of from £20,000 to £25,000 of unimproved value it would be twopence j upon land of an unimproved value of from £25,000 to £30,000 it would be twopence halfpenny ; and upon, estates of ‘ an unimproved value of from £30,000 to £40,000 it would be threepence in the pound.

Mr Kelly:

– From what is the honorable member quoting?

Mr KING O’MALLEY:

– I am quoting from the Argus of 12th July. The tax upon land of the unimproved value of from £40,000 to £60,000 would be threepence halfpenny, and upon estates of more than £60,000 unimproved value ‘ it would be fourpence in the pound. Hundreds of people throughout the country are talking wildly of confiscation, and are urging that the Socialists desire to confiscate their property. 1 cav that any person who holds £10,000 worth of unimproved land values ought to pay a little taxation. Taxation ought to be based upon equality of sacrifice. The following figures show the incidence of the suggested tax upon the basis which I have indicated : - An estate the unimproved value of which . was under £5,000 would bear no taxation. An estate which was worth £10.000 would contribute only £10 1 8s. 4d. per annum.

Mr Kelly:

– Would the payment of that sum have the effect of bursting up an estate ?

Mr KING O’MALLEY:

– We do not want to burst up the estates of little men, and we regard an individual who is possessed of only £10.000 worth of unimproved land values as coming within that category. An estate which was worth £15,000 would pay £3.1 5s. annually, one which was worth £20,000 would contribute £6.r. ros., one which was valued at £25,000 would be taxed to the extent of £104 3s. 4d., one which was worth £30,000 would pay £156 5s., one which was valued at £35,000 would pay £218 15s., and one which was worth £40,000 would contribute £281 5s. An estate which was valued at £50,000’ would have to pay £427 is. 8d., one which waa worth £60,000 would contribute £572 18s. 46., one which was assessed at £70,000 would Pa)’ £739» us. 8d., one which was worth £80,000 would return £906 5s., one which was valued at £90,000 would yield £1,072 18s. 4d., one which was worth £100,000 would pay £1,239 ns. 8d., one which was valued at £150,600 would yield £2,072 18s. 4d., and one which was valued at £200,000 would produce £2,906 5s. I quote these figures with a view to showing that if the Treasurer had . submitted such a proposal, and had earmarked a portion of the revenue- thus derived for the purpose of paying old-age pensions, and another portion for the purpose of establishing a sinking fund, -he would have had my blessing, as well as my support. Now I wish to say a word or two upon banking. I hold that we have a magnificent opportunity to establish a Commonwealth national postal banking system, for the purpose of assisting the small producers, the small distributers, and the small consumers. The present banking system is all right for the big men. It is founded upon the existence of millionaires. Lt has materially assisted to concentrate wealth in the hands of the privileged few. Only a few years ago the average wealth of the Commonwealth was about £300 per head. Since then it has been very materially reduced. In this connexion I desire to place before honorable members a few statistics. The twenty-two banks which are doing business in Australasia have a paid-up capital of £’18,490,500, exclusive of £2,500,000, which is guaranteed by the Government of New Zealand, to the Bank of New Zealand. These banks are on an exceedingly good wicket. They hold deposits amounting to £106,625,362. I admit that they have assets of £167.000,000. That, however, does not mean that they have £.167,000,000 in gold. It simply means that they have that amount in bonds, mortgages, deeds, and securities of all descriptions. But I would point out that those securities come from the people. The liabilities of these banks to-day is £141,535,809. lt will thus be seen that they have £126,000,000 of the people’s money with which to do business as against their own paid-up capital of £18,000,000. That is not bad. If private institutions can contract liabilities to the extent of £141,000,000 upon a paidup capital of £18,490,500, they owe it to the people of Australia with whose money they are doing business. Now, let me examine the profits which they have made during the past seven years. I have not their balance-sheets for the past six months. I find that in 1905 these twentytwo banks made a net profit of £1,700,631, in 1904 of £1,705,068, in 1903 of £1,622,686, in 1902 of £1,579,499 in1901 of £1,506,305, in 1900 of £1,304,441, and in 1899 of £908,080. Thus their total net profit during the seven years to which I have referred was £10,326,710.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– What interest does that represent upon their capital?

Mr KING O’MALLEY:

– It is not a bad interest upon a capital of £18,000,000. It will average about 7 per cent.

Sir John Forrest:

– That is not extraordinary.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It is not 7 per cent.

Mr KING O’MALLEY:

– It is not very far short of it.

Mr DUGALD THOMSON:
NORTH SYDNEY, NEW SOUTH WALES · FT; ANTI-SOC from 1906

– It is about51/2 per cent.

Mr KING O’MALLEY:

– It is more than that. The honorable member must recollect that I am speaking of their gross profits. This £10,326,710 has been paid by the producers of Australia during the past seven years for the use of money. It has been paid by them for the use of their own property, for, after all, if they had been able to obtain their money at the average rate of 3 per cent, they would have had the difference in their own pockets. As it is, that difference goes into the pockets of those who work not. for money-lending certainly does not involve labour. All that a moneylender has to do is to examine titles, bonds, mortgages, and other documents. The money he lends this morning may be lent again this afternoon. His duties simply involve the balancing or cancellation of debts. The Commonwealth, with its wealth and credit, shouldcarry on asystem of banking in connexion with the Postal Department. A man having a small business or a little farm, and who requires £50, £100, or £200 to tide him over a bad season,should be able to go to the local post-office, and, on depositing his deeds, obtain what he wants at not more than 4 per cent. The interest on permanent bonds should not exceed 2 per cent. Money lying in a box or in a man’s pocket has no value; it is only when exchanged for property, or bonds, or mortgages, that it acquires a value. I find that the banks of Australia have on deposit no less than £143,930,401. I do not mean to suggest that they have such a sum in their vaults. The gold in circulation in Australia amounts to £5,777,800; the silver in circulation is £1,070,000 ; and the bronze in circulation £95,800; making a total of £6,943,600. If we add to this £3,786,020, representing the bank notes in circulation, we have a total of £10,729,620. The gold reserves lying in the banks total £19,358,469, so that the total value of our gold reserve and bullion and notes in circulation is £29,788,089. If, as shown in the Budget papers, there is a sum of £143,000,000 on deposit in the various banks, and the reserves and money in circulation amount to £29,000,000, the expansion of credit and commercial paper must represent £114,000,000. If the banks can do business on paper - because a cheque, promissory note, or mortgage, is currency - why should not the Commonwealth be able to establish a nationalsystem of finance? There are not many difficulties in the way. The Commonwealth, through the medium of the Postal Department, could carry on a satisfactory system of banking. The post-offices could be utilized as branch banking offices, and the system could be extended without interference with the existing banking institutions. The banks say that their note issue rests on a gold basis, but what becomes of their gold when a crisis occurs? On such occasions gold is a fugitive from justice, it is like a thief stealingaway in the night. Where was it during the crisis of1893 ? If the late Sir George Dibbs, who was then Treasurer of New South Wales, had not made bank notes a legal tender, and so enabled the banking institutions in that State to distribute their gold over the rest of the States, not one of these institutions would have remained open. No system of currency should rest upon a commodity, so to speak, that is managed by stock gamblers, money-mongers, and various other men who have the management of the gold of the world. The Commonwealth isbig enough and strong enough to have a representative of its own property. Let me give an illustration showing the danger of the present position. We have a currency of £10,729,620 ; and if we had in the Commonwealth 200 men worth £150,000 each, they would represent £30,000,000, or more than the whole of the gold reserves and currency. Let us suppose that these men had £4,000,000 loaned on promissory notes, bonds, mortgages, and various other paper instruments. These 200 capitalists decide to call in 50 per cent, at a time when all the money in the Commonwealth was in active circulation - when the people were engaged in active commerce, whilst ships were waiting at the wharfs for our produce, and the crops of the farmers were waiting to be harvested. If it is ex-changed three times a week, a, circulation of £10,700,000 is quite sufficient for a population of 4,000,000. In those circumstances it would pay off debts amounting to over £32,000,000 every week, because the money which is given in exchange for one thing in the morning may cancel 100 debts before night. Let us assume that these men decided in the circumstances I have mentioned to call in 50 per cent, of the loans, with a view to holding the money for a higher market. The money so called in - £2,000,000 - would be onefifth of the entire circulating medium ; so that one-fifth of the whole of the debts of the Commonwealth would have to remain unpaid, because all the money was required before to pay the debts. Hundreds of producers would be put through the Bankruptcy Court, whilst in other cases debts would be compromised, or property sold by public auction. This having been done, these 200 men would withdraw their money from their vaults, buy up the property of the debtors at one-half their cost, and thus enrich themselves at the expense of their unfortunate fellow countrymen. As the result of their action, the value of all property and labour would have been depreciated, and the ability of the people to liquidate their obligations would have disappeared. It is a serious matter to allow the currency of a nation to remain in the hands of private gentlemen. In barbarous countries barter is the method of exchange. The moment that a country becomes civilized, new methods of exchange must be adopted, awd these methods have to be intrusted to some one. I wish to know why the directors of bar.k- ing institutions in Australia should have the power to either contract or expand our circulating medium? By what special dispensation of Providence have these men been selected to usurp the fundamental prerogative of a Government? The fundamental prerogative of the Government is to create the medium of exchange, to circulate it, and to contract or expand its circulation as is desired. But to-day this power is in the hands of private bankers - gentlemen who, although right enough in their way, belong to the guineapig aristocracy. I have the greatest respect for them, but I say that they are exercising a function which rightly belongs to the Government. We have given them the power to contract the circulating medium, and to gather the wealth of the people into the hands of a few. I hold that the Treasurer should have come down with a Commonwealth postal banking system of currency. In my opinion, the currency of this country ought not to rest on gold. Wherein is the efficacy of gold or silver? When a currency is based on gold, it is based upon a commodity which is controlled, owned, and managed by the financial stock gamblers of the world, who have the power to take it out of the country. Australia possesses so many million pounds in gold ; but when money rises in value in another country, this gold leaves our country, because gold always follows the market. You always have gold when you do not want it, and you never have it when you want it. It was not here when we wanted it in 1893, for example. The system of banking creates a crisis about every twelve or fifteen years. We have to-day £19,000,000 in gold lying dead in the vaults of the banks. That coin is useless. It does not produce a dollar ; it does not earn one penny. I understand that some gentlemen connected with banks desire to get the right to issue paper money. They know that paper money won the wars of Napoleon. When the Bank of England suspended specie payments, the wars of England were fought on paper alone. It was paper money which fought the United States war ; it was paper money which paid off the great national debt of France to Germany. Let us for a moment examine another power which the bankers have. If we do so, we shall discover another reason why the Commonwealth should utilize its great credit. It can utilize it only by establishing a banking system. Mr. Currie, in the course of a recent newspaper interview with regard to the offer of the Victorian Savings Bank to Mr. Bent of £2,000,000, said that in 1893 the Victorian Government guaranteed the deposits of the people, who now ‘have confidence in the bank, because the Government is behind it. At this stage I should like to say that the Labour Party is not responsible for my remarks. King “O’Malley is the architect of his own superstructure. I consult no one as to what I should say, or as to what I should not say. I am only putting before the people the result of my study of financial questions. I lived in the United States from i860 to 1872, and know that the paper money of the country, the greensbacks, were considered the best money in circulation, and the public had the most perfect confidence in it. It was only in 1873, when they began to tinker with, the gold resumption, that a panic was brought on, because the circulating medium was contracted. If the volume of paper money is regulated, and its circulation is based on the value of the properties, the products, and revenues of the country, it is a far better circulating medium, and medium of exchange, than either gold or silver.’

Mr Brown:

– What about international trade? How could it be carried on by means of a paper currency?

Mr KING O’MALLEY:

– I hope that my honorable friend does not think that the currency of a country affects in the slightest degree its trade with other countries. Australia does business with China, with Chili, with Japan, and with other foreign countries ; but this is conducted under a system of international exchanging of debts known as the foreign exchange system. This enables the traders of commercial nations to liquidate their debts to each other, without having to send money from one country to another. These debts may represent goods exported or imported, money borrowed, loaned, or invested, interest, or profits, cost of transportation, commissions for service, and other charges in connexion with financial or commercial operations, and must be paid, either in cash or by the exchange of commodities. The expense of transmitting gold or other currency, and the risk incurred by doing so, are also taken into consideration, with the result that what is called an international exchanging of debts is arranged, and this is done bv means of commercial paper, accepted throughout the world. The kind of money used by a country for its own circulation has nothing to do with its trade with other countries We use the, same monetary system as is used in Great Britain, and our coins are the same; but the rate of exchange between Australia and London is often higher than between the United States and London, or between France and London. Furthermore, practically the whole foreign trade of the Commonwealth is now carried on by means of bills of exchange, and when balances have to be met they are settled by the exchange of commodities. Among such commodities is gold, which is not exchanged in the form of sovereigns, but as bullion, being weighed and valued in the same way as potatoes, oats, beef, or other commodities. If there is a balance against Australia, we owing England £10,000,000, that sum remains at interest until we can sell beef, mutton, or wool, or exchange bills, or gold, or other commodities in settlement and cancellation of the debt.

Mr Brown:

– Then what becomes of the objection to sending money out of the country ?

Mr KING O’MALLEY:

– Money does not leave the country. In 1901 the United States exported £300,000,000 worth of products to Europe, and imported £180,000,000 worth. One would naturally imagine that the balance of £120,000,000 was also transmitted; but that was not so. Every man travelling from the United States to Europe carries a letter of credit, just :as any one going from Australia to England would take with him a letter of credit. The result is that the bankers in Europe charge up to the people of the United States the money that they advance on these letters of credit. Therefore, instead of the United States getting £120,000,000 at the end of the year, they had to send £670,000 over to Europe. I wish to point out the wonderful profits that are made out of deposits in banks. I have had a little banking experience in the United States, and I know something about it. The honorable member for Parramatta pointed out last night that a great mistake had been made by the Commonwealth in not taking over the Post Office Savings Banks. I hold that it is not too late for us to establish a bank in connexion with the post-offices for the purpose of receiving deposits and carrying on discount and ordinary banking business.

Mr Wilks:

– Would the honorable member make it a bank of issue, and put greenbacks upon the money market?

Mr KING O’MALLEY:

– I do not want to be led off the track. After the great war with Germany, France paid all her debts with paper money, which was issued to take the place of the gold that had left the country. We are a debtor nation, and we should be careful not to place ourselves at the mercy of those who have a monopoly of the gold and silver in the money markets of the world. When a bank is established, and 1,000 customers come forward with deposits on current account, averaging £200 each, the bank at once has £200,000 placed at its disposal. No interest has to be paid in respect of this money, and therefore the bank makes a clear profit upon such amounts as it lends to other customers. Money is continually passing over the bank counter, and every afternoon, at three o’clock, the whole of the cash returns to the bank, and is available to be loaned out the next day. One man mav reduce his credit to £50, or another to £5, whilst in some cases an overdraft may be granted upon security. Upon the other side, one pays in £50, another £100, and still another £10,000. At the end of every afternoon, however, matters are adjusted, and the same amount of money is available for the next day’s transactions. Why should we not, in connexion with our post-offices, establish a banking system for the benefit of the poorer classes in the community ? I have no objection to our present private banking system, because I can get all the money I require; but I desire to help the poorer classes. If the Commonwealth had a bank of issue and discount, under the management of a ComptrollerGeneral, who would be entirely removed from political control, paper money could be issued for the payment of salaries and for the liquidation of other liabilities incurred by the Commonwealth. The Commonwealth notes could be made a legal tender.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The honorable member is plagiarizing the scheme of the honorable member for Brisbane.

Mr KING O’MALLEY:

– No, I am not. The honorable member for Brisbane bases his scheme upon a gold standard, whereas I am opposed to gold as a standard. If we ha’d a bank of issue tomorrow, and based our currency upon a gold standard, the capitalists would combine to demand payment of their debts in paper money, with a view to afterwards rushing the State bank and demanding gold for the State notes. The United States made a great mistake in basing their currency upon gold, because they placed themselves within the power of the gold-bugs and gold- jobbers. The poorest public financiers that the world ever knew were those who made money for themselves, and the best public financiers, have been those who never could make a dollar for themselves. The greatest financier in Australia was the late Sir Henry Parkes, and the greatest financier that the United States ever knew was Daniel Webster, who died comparatively poor. Honest paper money, honestly managed by an honest comptroller of finance, based upon the property and products and revenues of the country, would make the best medium of exchange, because it could be made available to the people at a low rate Of interest. Our banking system could be worked under arrangements which- would permit of a man who had £100 for which he had no use, depositing it in the State bank, and receiving in return £100 worth of consols at 3 per cent. The money thus placed at the disposal of the bank could be brought into circulation for the benefit of the public. Great Britain had to fight a war when- the gold cleared out of the country like a thief. She had’ to whip Napoleon with paper money. In the same way, the northern States of America had to whip the southern States with paper money. I would not permit the Treasurer to issue paper money, because probably he would avail himself of his powers too frequently, or under circumstances which would operateto the detriment of the Commonwealth. I would’ leave it to the Comptroller-General to issue paper money, based, not upon gold or silver, but upon the wealth and revenues of the country. With such currency, tEe public would be able to exchange .their properties and products without having to depend upon the Rothschilds, Vanderbilts, or Rockefellers. What chance would this country have if J. D. Rockefeller came here and “wanted to run the show? Let us for a moment consider the various utilities of paper, in which case a legal power expressed in it is deemed sufficient security for 95 per cent, of the financial transactions of the world in the ordinary every-day affairs of life. A piece of paper is used in connexion with giving titles for land, in making payments for land, and in making loans, upon mortgages and otherwise, and, in fact, all transactions upon credit are carried out by means of paper. The value of these paper instruments lies in the fact that they give the holder a legal lien upon the property to which they relate. They have no value in themselves. All money, whether gold, silver, or paper, is created by the laws of the land, and has no value, except that given to it as a medium of exchange or its commodity value. The difference between a private obligation, such as a mortgage or promissory note and money, is that the two former are private legal liens - the mortgage on a specified piece of property, and the promissory note on any or all the property of the individual making it - while money is a public legal lien on all property for sale, whether owned by the Government or individuals. Between the Government and individuals, the law secures the enforcement of aLT contracts by mortgages and other paper instruments. If these paper instruments can be made safe and sound legal representatives of property between two individuals,’ there is no reason why they cannot be made safe and sound legal representatives of property between any .number of individuals ; and if between any number of individuals, for limited periods of time, is there any earthly reason why they cannot be made safe and sound legal representatives of property, when made payable on demand ; and if made payable on demand, in something capable of producing an immediate income. They then are able to perform all the functions of actual money, and are money, for money can have no other utility except to exchange for property, or to loan for an income. Bank notes, I would point out, are regarded as money, although they are not legal tender for “the payment of debts. But the banks are chartered by law, and by -reason of that fact the notes which they issue are regarded as money, and pass as such. When I came to Australia some years ago I visited a bank for the purpose of getting £100, and I received the money in notes. Now the banks pay in gold, because they are charged 2 per cent, for the privilege of issuing the notes. I want to put another illustration. Let- us suppose that an honorable member received £1,000 in sovereigns from a. bank, and carried it into the country, where he entered ‘another bank and said, “ I am tired of carrying these sovereigns; give me £1,000 in bank notes in lieu of them.” His demand having been complied with, we will further suppose that he purchased a farm with those notes, and that the vendor immediately deposited them with the bank which lent them out. They would travel all over the country, they would probably be used to purchase other properties, to effect hundreds of mortgages, and generally to enable, people to derive a certain amount of prosperity. Why ? Because, to all intents and purposes, they would be mopey. After passing from hand to hand a thousand times, they might, at the end of ten years, find their way back to the bank. During the whole of that period they would have performed all the functions of money, whilst the sovereigns which lay idle in that institution would have discharged none of them. When they returned to the bank, if there were no. gold to redeem them, would any of the transfers of property which had been made by reason of those bank notes be assailable in law? Certainly not ! I repeat that they would have performed all the functions of money, whereas the gold would have performed none of those functions. I want honorable members to get themselves out of the hands of the gold bugs. The existing banking system has enabled a few individuals to gather into their hands the property of millions. Every day we read in the newspapers distressing accounts of poverty. In the Herald last night I read an article which was headed, “ The Destitute. Their Bitter Cry. Why should there be Destitution?” Why should there be poverty ? Indeed, if the wealth of the people had not been gathered into the banks, there could be no poverty. I merely desire to show that the value of all property, labour, and rents, falls in proportion to the increased value of the sovereign, by which it is measured. If the rent of any property be not sufficient to produce an amount equivalent to the value of the property itself in as short a time as will the money loaned at interest, the property will fall in price until the rent bears the same proportion to the value of the property that the rate of interest does to the principal. The value of property depreciates in proportion to the increase of the value of the sovereign that measures it. Whenever the value of money increases by a rise of interest, there is a corresponding decrease in the value of property. With the rise of interest on money, property falls in price, so that one sovereign in money balances two, three, four, or five times more property than it did before the rise of interest. Enough property must be added to make the rent equal to the interest on money no man will purchase property unless it yields as much as the money paid for it will yield by way of interest. Therefore, the price of property must fall wheneven the interest on money increases. All obligations for the payment of money are based on money, and hold the same position with respect to labour and property. All bonds, stocks, and debenture investments, fall similarly. For example, if interest rises from 4 to 9 per cent., a State bond bearing 4 per cent, will fall below its par value, but will continue to bear the same rate of interest that it did before the rise of interest on money ; yet the bond can be exchanged for more property than before the rise of interest. Hence the liabilities of all debtors whose means of payment are fh their property, or in their ability to labour, are increased in proportion to the increase of interest on money, or in other words, the rise of interest has decreased the market value of property and labour, so that two, three, four, or five times the quantity formerly required must be sold to procure money to cancel debts. The injustice done to debtors by increasing the value of the measure by which debts were contracted is evident. Money, the measure of value, constantly fluctuates. The sovereign is the measure of more or less property, according to the rate of interest. Let me illustrate what I mean by putting a supposititious case. Let us assume that two men are working for wages and saving their money, which they lend out at interest. I will suppose that they are located in a population of 5,000 - in a small community in which nobody speculates. I will assume, further, that they save 4s. 2d. daily, and that they lend out their money at 7 per, cent. If they worked 300’days a year, at the end of sixty-one years and four months each would have saved £2.480, so that their joint savings would be £4>96°- At sixty years) of age they would be worth £25,000, despite the fact that they had earned only £4,960. Let us assume that they now’ remained idle for twenty ve,irs loaning money. At the end of that time they would be worth £104.002. In other words, they would have earned by their labour £4,060. and would have gained £99,042 bv interest. The present system of money lending does not afford a chance to a man in a small way of business, and means the gradual gathering of the wealth of the people into the hands of the privileged few. I am continually being told that if the Government place on a piece of paper a promise to pay, that piece of paper has no value, but that a piece of paper so indorsed by a bank is valuable. When 1 inquire the reason for this, 1 am told that a promise to pay on the part of a bank is valuable, because it rests upon a Government bond. And the Treasurer tells us to-day that Government bonds are valuable to the people. Are not these bonds promises to pay ? Is not a Government bond a promise to pay, even if it be only in respect of a limited number of years ? Supposing that we were to “ coin “ the £236,000,000 representing our indebtedness, and to make it a promise to pay, would not the position be as good as it is to-day ? The only difference would be that we should use our debts as a means of exchanging our produce and other property. I trust that the Treasurer will look into this matter. When I was in the States I never saw gold or silver. There we used “shinplasters.” I could go into a store, buy what I wanted, and pay my _paper money. There was never any trouble about the system until the “ greenbacks “ were placed on a gold basis. Under the heading of “A Metal Base is a Cause of Industrial Crises,” T find in Rational Money the statement that -

The variations of money, due to natural or artificial causes, constitute a prolific source of panic, originating or permitting and intensifying every industrial crisis. Wendell Phillips said-

Every one has heard of Wendell Phillips: - “The great lie called ‘specie ,basis ‘ has destroyed the commercial prosperity of the United States once every six years since the nation started.” Looking over the history of England and America, we find that panic:? of the first magnitude occurred in England in 176.?. 783. 1.793. 1/07, 1S16, 1825, 1837-8, 1847, >SS7- 1866, 1875, and 1S90-3, and in the United States in 1819, 1825, 1877, 1830, 1847, 18^7, IS71. ami 1893 (with a plentiful supply of lesser disasters in intermediate years), and every one of them was either directly caused by the movement of money, or grew to ruinous dimensions because the money volume failed to expand at the proper time to relieve the financial pressure, metallic money being far more apt to sh”“1’ away and hide itself in time of danger than to come to the rescue of commerce when credit money is shaken.

Only a proportion of the deposits in the banks-i-that represented by the savings of the workers - is available for permanent investment. The remainder, which constitutes the greater proportion of bank deposits, represents only an expansion of credit. When a bank lends a customer £1,000 on his promissory note, it discounts that note, placing the money to the credit of the customer, but the bank’s loans and deposits are increased by £1,000. No money is added to or taken away from the bank. It is a mistake for people to imagine that bank deposits actually mean that an equivalent sum is held ‘by the bank. They simply mean credits in ledgers. Even when a customer draws cheques against his banking account, the money in the bank may not be reduced by one penny; his cheques may go to the credit of other customers of that institution, or find their way into other banks, where they are used as a set-off to similar transactions. If that credit be wisely made, it would be redeemed by the customer accumulating in the bank sufficient money to enable him to give his cheque :and refire the promissory note. The credit thus given by the banker to the customer has practically added during its currency to the resources of the business community.” A vast amount of business is accomplished by means of the credit system, and very little money is required to balance it. If a credit be unwisely made, the bank must lose, because, while its resources are reduced to the extent of the amount borrowed, its liabilities remain undisturbed. When we read in the newspapers that there is an increase in bank deposits, we should recognise that that may mean an expansion of credit rather than an actual monetary increase. In the same way, when we read of a reduction of deposits, we should not forget that that may mean a contraction of credit rather than an actual withdrawal of money. Ninety-five per cent, of all the business of the Commonwealth is done on credit, and in the majority of cases the remaining s per cent, represents only credit in another form. We credit the Commonwealth with our salaries for the month, and the Commonwealth credits some one else. The whole system of finance is one of credit. We shall soon become bushed if we lose sight of the place and potency of credit. In credit modern commerce lives, moves, and has its being. It is not merely the means by which we buy and sell and pay, which it is difficult to designate, but it is the means by which the representatives of property or value are exchanged. Credit lives on confidence, and confidence is only a reflection of existing economic conditions. When confidence prevails credit expands easily. When confidence is shaken credit contracts in proportion to the gravity of the cause. When confidence is destroyed a financial panic follows, and thousands of honest small producers and traders are ruined. The funds which absorb floating investments come from various sources. In the first place they come from savings bank deposits, representing not an extension of commercial credit, but the actual savings of the working people. In the second place, they come from the profits of commercial banks which can be withdrawn and invested. Thirdly, they come from fire and life assurance companies, benevolent, charitable, religious, and educational institutions, and from estates, the trustees of which have decided to remove their trust moneys from the general risk incidental to business transactions, and to invest them in permanent securities that call for no management. Then, again, they come from the funds of retired business men who adopt a similar practice, and from the investment accounts of commercial banks maintained for the purchase of liquid securities which can be speedily converted into cash whenever it is desired to do so. Finally, thev come from the unearned increments of estates. These are the sources from which the funds of the people come.

Mr Webster:

– Where do thev go?

Mr KING O’MALLEY:

– To enrich and strengthen the money power of the privileged few who run this country. I want the Labour Party to take courage. They should pav no attention to the nonsense that is talked about “ shin-plasters,” nor to the utterances of those who talk mildewed, double-distilled rot, on other phases of this great question. They ought to tackle this question, they ought not to be frightened to grapple with it. We have a great history, but .we must take care to look into the history .of other nations. The Bank of Venice was for 600 years the most powerful banking institution in all Europe.

Mr Webster:

– What happened to it?

Mr KING O’MALLEY:

– Napoleon Bonaparte stole the proceeds of its transactions. Let us not forget that Rome fell. Carthage fell, and Greece fell. Whilst they are gone, we are here ! Not a broken arch, not a prostrate column, not a crumbling capital, in all the drifting shoals of antiquity, But witness these truths. A hundred flourishing empires first exalted, then humiliated, conquered and cast down, should teach men that the laws of nature and nature’s God may not be violated with impunity. The stony lips of von Egyptian sphinx which keeps its silent vigils over the sepulchral valley of the Nile, once the home of so many millions full of life and hope and energy - there buried, kindred, name and memory : engulphed and swallowed for ever in that awful winding sheet of band, out of which those mighty pyramids arose, each one an imperishable monument to the tyranny of ancient rulers - repeat to all subsequent ages the folly of wasting the energies of millions to subserve the pleasures and passions of the privileged few.

Mr SKENE:
Grampians

.-I wish to congratulate the Treasurer and the officers of the Department upon the mass of useful information supplied in the Budget. The charge of too great optimism has been brought against the right honorable gentleman, but there does not appear to be much to sustain it. The chief objections which have been brought against his policy relate to his proposals to establish penny postage throughout the Commonwealth, and to acquire a trawler. The proposal for the establishment of penny postage throughout the Commonwealth does not greatly concern the State of Victoria, because we already have penny postage here, though, no doubt, it was established under the misapprehension that it would be paid for by the Commonwealth. There was a penny post in Victoria prior to 1893, but in that year a reaction took place, because it was found that the system entailed an annual loss of £70,000.

Mr Austin Chapman:

– Is Victoria prepared to again go back on the penny postage system?

Mr SKENE:

– I do not think that Victoria wishes to do so. The proposals of the Government in regard to penny postage, however, concern the other States, and especially New South Wales, more than they concern Victoria, and I, for my part, do not feel disposed to oppose them.

Mr Brown:

– The introduction of pennypostage is a step in the right direction.

Mr SKENE:

– It is a step in the right direction, though, considering the increase in Commonwealth expenditure, it must be recognised that we are beginning to sail a little close to the wind.

Mr Hutchison:

– The adoption of penny postage will make it difficult to pro vide for a Commonwealth old-age pension system.

Mr SKENE:

– Alexander the Great cried for more worlds to conquer, and the Treasurer seems to be sighing for bigger undertakings to manage. I think that it will be admitted that in the past he has very successfully handled large undertakings, and has had practically no failures. He spoke the other night as though he were disappointed that he cannot carry out more public works. He has, however, undertaken to deal with a big problem in proposing a scheme for the transfer to the Commonwealth of the debts of the States, and in providing a policy for the encouragement of immigration, and the settlement of people on the land. In his speech he said that-

The Government, and also the Parliament, I believe, have been very anxious to assist emigrants of the right class to come to Australia. The determination of the Ministry to encourage industries of all kinds, and so to provide remunerative employment for the people, must do good, and I believe that when the facts are known and understood in the old country and elsewhere, the effect of this policy will be beneficial. The Government have no desire to bring to Australia a number of people to compete in the labour market when it is sufficiently stocked. What we desire is to encourage the settlement of our lands, and to induce people to come here, either with strong arms and stout will, of with small capital, and to throw in their lot with us in the cultivation of the soil and the establishment of manufactures and industries.

This is a question which will tax all his great business ability, and will need to be carefully handled. We require two classes of immigrants. For the development of the Northern Territory, which, we are bound to attempt as soon as we can, we shall have to introduce labourers, probably from the warmer climates of Europe. I do not know exactly what the Treasurer meant when he referred to immigrants having a small capital, because the term is relative. There are already in Australia a great number of persons possessing a small capital who wish to settleon the land. I know that in Victoria, no sooner is a property put upon the market, or otherwise made available for settlement, than it is overapplied for. Therefore, our first duty is to provide land for our own people. The honorable member for Bland said the other night that there is no land for the people to settle on. But there is any quantity of private land, which could be obtained at a fair value, on which suitable persons could be settled. Hardly a day passes but such land is bought by syndicates and resold at. a profit, and I think that the Government might well buy good land and sell it to persons with small capital coming from the old country.

Mr Webster:

– Does the honorable member mean the Governments of the States?

Mr SKENE:

– Not being a lawyer, I may not be able to properly read the technical meaning of the provisions of the Constitution, and am therefore not absolutely sure of my ground ; but I think that the Governments of the States and the Federal Government might work together in this matter. I think that what I propose should be done on a big scale, so as to arrestattention. The Commonwealth Government, in conjunctionwith the Governments of the States, might perhaps acquire, say, 1,000,000 acres of the very best land in New South Wales and elsewhere, leaving it in the hands of the present holders at a moderate rental, which would cover interest, until applied for by persons coming from the old country with sufficient capital to develop it. I would not, of course, interfere in any way with the settlement of our own peopleon the land ; but I do not wish people to be brought here from the old country, to find when they get here that there is no land available for them. Now is the time to acquire land, because every year it is becoming dearer, so that, the longer its purchase is delayed, the smaller will be the profit in the transaction which I suggest. But as private syndicates are making £1 to £2 an acre by land transactions, I think that the Government might well step in and prevent future settlers from having to pay the high prices which will ultimately be charged under the present system. A friend of mine who is a prominent member of the State House, and with whom I travelled in New Zealand eighteen months ago, told me that he had been informed by the late Mr. Seddon that one of his troubles in connexion with the settlement of people on the land was the timidity of those whose duty it was to purchase for the Government. Similar timidity has been shown here. I could name several estates which the Government might have secured, but failed to do so. I offered my own property to the Government of Victoria, but the offer was not accepted, and I sold most of it a little later at more than £1 an acre in excess of the price I originally offered it at.

Mr Webster:

– But the honorable member, no doubt, offered it to the Government for cash, while he had to sell it on terms.

Mr SKENE:

– I sold it on three years’ terms, which is almost as good as cash.

Mr Reid:

– And no doubt received good interest on the unpaid balance.

Mr SKENE:

– I am getting good interest, and £10s. 4d. more per acre than the price at which I offered the land to the Government. I think that the Government might well act in this way, and let the peopleof the old country know that there are thousands of acres available, to be taken up in limited areas, because, of course, the large capitalist could not be allowed to come in under the system I speak of. I have not had experience of farming in the old country, but I understand that an incoming farmer requires a capital of about £3,000 to take over a farm on lease. Of course, it has been kept in working order, and part of the money is required to buy the crops which the outgoing tenant has been compelled by his lease to, put in. A similar sum would lay the foundation of a big fortune here. So far as I have been able to read, in no place in the wide world can farming be more profitably carried out than in Victoria, and parts of New South Wales, at the present values of land. A short time since, I was travelling by railway in the North-Western District with a gentleman representing the Massey-Harris Company, who had been hereonly five or six months, and he told me that nothing struck “him so forcibly as the wealth of our farmers. I knew the country through which we were passing, and was aware that the information which he had obtained was correct. He said that in Canada they count wealth by dollars, whereas we count it by pounds, and that, whereas a farmer there possessed of $10,000 would be esteemed wealthy, here a man would require to have, perhaps, $50,000 to be thought extra well off. Many of the men who have made fortunes in wheat-growing commenced without capital and without a knowledge of farming, having previously been engaged in storekeeping, hawking, and other occupations. Not very long ago, one of my neighbours told me that he paid the survey fees of his land with part of the proceeds of a cheque which he made by shearing at anadjoining shed. Then he had to so on fencing for neighbours and do other work to help him to pay his way, and at present he is worth £10,000.

Mr Poynton:

– - They did not pay the same prices for their land that are demanded now.

Mr SKENE:

– They did not; but men going on the land now possess a great advantage over the earlier settlers, because they have a knowledge of the crops which can be grown and the uses to which the land can best be turned. I question - whether a man who could get land upon deferred payments in the old days, and who frequently had to travel twenty miles for water for domestic purposes, would be in any better position than those who buy land at present prices. Many of those who take up land now expect to pay for it within two or three years. In Scotland, when I was a young man the value of land was estimated at thirty years’ purchase. That is to say, if a property would pay for itself within thirty years it was considered a good investment. Here, apparently, men are not satisfied unless they can pay off their purchase money within three years. Upon one occasion I rented a piece of land at 5s. per acre to a man, who came to me after having reaped his’ first crop, and told me that he was in a position to buy the land with the proceeds of his first harvest. If we placed before the farmers of the old country the advantages of coming here and investing £2,000 or £3,000 in land, good work would be done for the Commonwealth. I assume that it will be part of the duty of the High Commissioner to put matters in their proper light before the people of the old country One has only to read Rider Haggard’s sketches of rural life in England to realize that farmers could with advantage leave the old country and invest their capital here. In dealing with’ the Northern Territory, it seems to me that we shall have to be very careful in regard to the question of railways. I was very much impressed some years ago by a plan circulated by Mr. Alexander Wilson, of Svdney, and formerly of Coree station, in which he showed that a ralway from Bourke, or some other point further north, across to Port Darwin, would traverse for the greater part of the distance splendid grazing country, from which many, thousands of head of cattle are now sent down to Adelaide, where they arrive in good marketable condition, after having been eight months on the road. I was very much struck bv the arguments adduced by

Mr. Alexander Wilson in support of the view he took, because I was aware that he knew what he was speaking about.

Mr Hutchison:

– South Australia is building a line as far as the Macdonnell Ranges on her own account.

Mr SKENE:

– Yes; but I understand that there is a great deal of desert country between the Macdonnell Ranges and Port Darwin. I do not wish to elaborate the subject; but I consider that we should be very cautious in dealing with a matter of this kind. In regard to the States debts question, we have had a plethora of valuable suggestions put before us by very able men. The honorable member for Mernda told us that the Treasurer had taken him into his confidence, and had invited his assistance in the matter. I could not help feeling rather sorry for the Treasurer, because his position brought to my mind an incident which occurred in the social world in Victoria some years ago, when a person who was invited to act as best man at a wedding, ended by carrying off the bride. Judging from the reception which the remarks of the honorable member for Mernda met with last night, it seems to me that the Treasurer has some prospect of losing his scheme. I hope, however, that the honorable member for Mernda and he will manage to work together, and evolve something which will prove acceptable to Parliament. I have not had an opportunity to closely study this question, but one thing seems to me to be very clear, namely, that if a stop is put to the borrowing of the States in the London market, they should never be permitted to re-enter that market. With regard to borrowing in the local money market, I confess that I am rather puzzled. I cannot very well explain the relative positions of Government debentures and those issued by the Melbourne Metropolitan Board of Works and the Melbourne City Council, excepting on the ground that the direct security of the State is regarded in a more favorable light by investors. I notice that Victorian Government debentures redeemable in 1913, were quoted on 4th August at £to5 5s. The Metropolitan Board of Works debentures were quoted at £103. There is a considerable difference in the market quotations, for the two forms of debentures, although both are regarded as safe investments bv the banks. The 3J per cent, bonds of the Victorian Government stand at £100 ros-, whereas the City of Mel- bourne bonds are quoted at ^97 5s. I have pointed out that the Government bonds are regarded as better than the Metropolitan Board of Works bonds, and I presume that the Commonwealth bonds would be better than either. All that I am able to gather at present is that there is an apparent distinction made between State and municipal bonds, and that probably a sufficient preference would be given to Commonwealth over States bonds to justify the expectation of the honorable member for Mernda that we should be able to borrow money at something like 3 per cent. The honorable member for Parramatta stated last night that the functions of the Federal and States Parliaments should be kept clear and distinct - that we should stop trenching upon each other’s domains. I have some doubt upon that point. I think that we are drawing away from each other, rather than coming closer together, as we should do. Probably one explanation is to be found in the fact that we have .not followed upon the lines of the United States in arranging that our Senate should be elected by the States Parliaments. I was very much struck by. a passage which I recently read in Mr. Lawrence Lowell’s book on Government and Parties in Continental Euro-pe. I want to apply the quotation to the question of the States railways, and to the settlement or the people on the land. It would appear from what Mr. Lowell says that the relations between the National Parliament of Switzerland and the Cantons are very much closer than anything we have contemplated here as between the ‘Commonwealth Government and the States. Mr. Lowell says -

The Swiss Confederation resembles our own (the United States) in being a union of States possessing equal rights, but the distribution of power between those States and the central go- vernment is based on quite a different plan from that which prevails here. In this point Switzerland is much more closely akin to Germany than to America; for instead of assigning to the Federal and States Governments separate spheres of action, the Swiss, like the Germans, have combined legislative centralization with administrative decentralization, the Federal laws being carried out as a rule by the cantonal authorities. Except for foreign affairs, the Custom house, the postal and telegraph services, the alcohol monopoly, the polytechnic school, and the arsenals, the Federal government has scarcely any direct executive functions, but acts in the way of inspection and supervision.

If a system of that kind could be adopted here, many of the objections now raised to our taking over the railways would be ic- moved. In view of the great area of Australia, it would be impossible for us to work the railways under one management, but I think that we could do all the financing necessary in connexion with them, and leave the States to manage the railways under conditions to be agreed upon. In that way we may be able to arrive at a means to achieve that which some people regard as impossible. I do not know whether under the proposal of the Treasurer it would be possible for the Commonwealth to raise loans at lowest rates, and allow the States to distribute the money for the purpose of settling people upon the land. I do not think that there is anything in the Constitution to prevent that from being done. I ask the Treasurer whether he will look into the matter a little further, because I am satisfied that the question of the settlement and development of the lands of this country is one of the most important that we shall have to face in the near future.

Sir John Forrest:

– The matter is within the jurisdiction of the States, I think.

Mr SKENE:

– That is so in regard to the parcelling out of the land.

Sir John Forrest:

– - Of course, loans can be raised for any purpose.

Mr SKENE:

– The States and the Commonwealth may be able to work together on the basis of the Commonwealth borrowing money at a low rate of interest, and allowing the States to use it for settlement purposes. While we finance the States, and act as a sort of clearing-house for them, the details could be left in their own hands. I was much struck last night by some figures quoted bv the deputy leader of the Opposition as to the increased cost of government in Australia since Federation. He said that the expenditure had risen from ,£28,000,000 to £33,000,000.

Sir John Forrest:

– Expenditure on what ?

Mr SKENE:

– The expenditure of all the States and of the Commonwealth on government. T think that those figures are rather alarming.

Sir John Forrest:

– They would require a good deal of analysing.

Mr Harper:

– What did the honorable member include in the cost of government?

Mr SKENE:

– He was asked that question,, and said that the figures included the whole cost.

Mr Harper:

– Did he include railways and Post Office expenditure?

Mr SKENE:

– I think he included everything. The conclusion at which he appeared to arrive was that the States have been spending pretty extravagantly the money paid them by the Federal Government. The honorable member does not usually speak wildly, and without consideration, and such a criticism coming from him is important enough to warrant the close attention; of the Treasurer, who should analyze the figures.

Sir John Forrest:

– That increased expenditure cannot be due to the Commonwealth Government.

Mr SKENE:

– I think that the point which the honorable member for Parramatta was making was that, while the people of this country were induced reenter Federation on the understanding that it would cheapen the cost of government, and conduce to economy, the opposite has been, the effect.

Sir John Forrest:

– It must not be forgotten that the Commonwealth pays cash for many works which the States used to construct out of loan money.

Mr SKENE:

– Whatever explanation may be made, it does not touch the bald statement that £5,000,000 more is now paid on government on Australia than was paid before Federation. Certainly the assurance given to the people has not been realized, and the cost of government has not been decreased.

Sir John Forrest:

– The increase is not due to us, anyhow.

Mr SKENE:

– I have put before the Treasurer such matters as occurred to me; and I desire to say, in conclusion, that the points laid before the Committee last night by the honorable member for Mernda were extremely valuable. The honorable member is entitled to our thanks for the very clear statement made by him. I am glad to know that the question of the States debts has been taken up thoroughly, and am pleased to learn from the Treasurer that some action will be taken. It is time that something definite was done. I think also that in time we shall be able to take over the railways and in other directions justify the hopes which the people had in establishing the Federal Parliament.

Mr LONSDALE:
New England

– Referring to what the last speaker has said, I may state that the prophecy that the cost of Government would be reduced by the establishment of Federation, has certainly not been realized so far as New South Wales is concerned. It can be conclusively proved that the effect of Federation has been to increase the taxation of that State to an enormous extent. The people of New South Wales are paying a great deal more in taxes than they did previously.

Mr Frazer:

– But the State has received back a good deal of the money.

Mr LONSDALE:

– There can be no doubt that much ot the money has been re: turned to the State and has been recklessly spent.

Mr Brown:

– By the State.

Mr LONSDALE:

– Yes ; I wish to be perfectly fair. The great bulk of the money raised through the Customs which has ‘been returned to the States has been recklesslyspent by the States Governments. Just as the Federal Parliament is under the control of its constituents, so are the States Governments under the control of the electors of the States, and it is for the people to insist that they shall be more wisely governed in this respect. Those public men who opposed Federation, told the electors that they would have to incur a large amount of extra taxation in consequence of the establishment of Federation, and that they could rest assured that the money returned to them would be utilized to lessen the taxation in other directions. But, unfortunately, the public did not take care to. have a bond signed to insure a reduction of local expenditure. The consequence has been that taxes have been imposed and recklessly spent, and the people have suffered enormously. Some people entertain the idea that the more money a Government takes out of the pockets of the people, the richer they become.- Many Victorians believe that, but in New South Wales our people subscribe to an entirely different doctrine. No free-trader believes in that sort of thing. The truth is, that the more we leave in the pockets of the people, the better ,off they are. Consequently the Government should be as economical as possible, and wherever they can do so, they should! reduce taxation, .rather than increase it. I quite admit that the Treasurer has placed before us a very clear statement. It is really the statement of an accountant, but there is nothing constructive in it. With regard to penny postage, I fear that the adoption of that system will have the effect of increasing the burdens of the people in some directions, although it may lessen them in others. It will be severely felt by some of the States,and amongst them by Tasmania. According tothe Treasurer’s figures, the effect of the establishment of penny postage will be that New South Wales will lose £58,000 per annum; Victoria, £14,000; Queensland, £29,000; South Australia, £23,000; Western Australia, £19,000; and Tasmania, £14,000. . I cannot say that I am thoroughly in favour of the scheme, but in New South Wales such an extraordinary position exists at the present time that I cannot see my way clear to vote against it. There a hybrid system is in vogue - a system under which a line is drawn round a fairly large town, just outside of which there may be a couple of settlements containing a considerable population. The residents in these settlements are required to pay 2d. postage upon their correspondence, whilst inside the area to which I have alluded the people are required to pay only1d.

Mr Brown:

– But under present conditions there can be no extension of penny postage to those towns.

Mr LONSDALE:

– I am quite aware of that. If it were not so, I should vote against the adoption of penny postage at the present juncture. But I do think that we ought to consider the needs of Tasmania in this connexion. There is no doubt that that State has suffered very severely as the result of joining the Federation. The direct taxation imposed upon her people has had to be immensely increased to enable the Government of the country to be carried on. It seems to me that the £14,000 which Tasmania will be called upon to sacrifice under the Treasurer’s scheme should, if possible,be saved to her. I daresay that New South “Walescan bear her burden, because it will have the effect of preventing money from being wasted in other directions. But a small State like Tasmania cannot overtake its expenditure in the same way. Queensland, too, has been hard hit by Federation. But Queensland is a progressive State, and her population is increasing at a much faster ratio than is that of Victoria. Indeed, the time is not far distant when she will rank with either New South Wales or Victoria, and therefore the burden which will be imposed upon her by the adoption of the Government proposals will not be so heavy in the days to come. If we can secure penny postage within our own territory, I can see no reason why we should extend it to outside nations.

Sir John Forrest:

– Not to the mother country ?

Mr LONSDALE:

– I am quite as solicitous for the welfare of the mother country as is the Treasurer, because to a large extent I am prepared to free her trade from the burdens which are imposed upon it at the present time, whereas the Treasurer is not. If we extend the system of penny postage to Great Britain, we shall not confer much advantage upon her. When the Treasurer talks so earnestly of the mother country, I sometimes think that he is speaking with his tongue in his cheek. Our own people would derive most of the advantages of the system of penny postage if it were extended to the mother country, in that they would get their correspondence carried cheaper than it would otherwise be carried. But I wish to point out that in the sparselypopulated portions of Australia there are little knots of settlers who urgentlyrequire improved means of communication. I know that a large number of these settlers are called upon to pay not only a fee of 2d. on each letter which they post, but also a certain proportion of the cost of the contract which brings their correspondence to them. It would be much more generous to doaway with the latter practice than to give pennypostage to wealthy persons in the cities, who already enjoy great advantages.

Sir John Forrest:

– There is penny postage in the cities now.

Mr LONSDALE:

– Yes; but it is proposed, in the interests of commercial men, to extend penny postage to other countries. I do not object to the residents of the cities getting all the advantages which they can, so long as some advantages are extended to the people in the interior.

Sir John Forrest:

– We are trying to do so.

Mr LONSDALE:

– If the Treasurer will promise that, instead of establishing penny postage to foreign countries, he will put aside a sum to cover the subsidies which the settlersin the interior are nowcalled upon to pay, I shall be very grateful to him.

Sir John Forrest:

– It will not cost much to extend penny postage to foreign countries.

Mr LONSDALE:

– Our duty should be to look after the settlers in the interior rather than to enable commercial men to send their correspondence to foreign countries at a cost of1d. instead of 2d. per letter. I appeal not only to the right honorable gentleman’s good nature, but to his sense of justice, to extend to the settlers in the country those advantages which he desires to give to the people in the cities. At the present time, the Department is delivering letters in the cities not only once, but three or four times a day, but it will not take letters to the men in the interior once a week without charging them with a proportion of the cost of the mail contract. Surely, the Treasurer can see that my contention is only fair. Knowing what it is to livein a desert, as he has had to do sometimes, he ought to have a great deal of sympathy with the men whose cause I am pleading, and upon whom rests, to a large extent, the prosperity of this great Commonwealth. Some honorable members are very considerate to the men who live in the cities, and are always professing a desire to help those who are located in the neighbourhood of Seats of Government. But do not let us forget the requirements of those who live in the back-blocks. The Treasurer is very emphatic on the question of preferential trade, and oftradewith the old country. He has pointed out how the Commonwealth trade with England, as compared with other countries, is falling off. I observe that the PostmasterGeneral is entering the Chamber. I regret that he was not here when I was speaking on postal questions.

SirJohn Forrest. - I shall tell my honorable colleague what the honorable member has said.

Mr LONSDALE:

– I think that I ought to repeat my remarks for the special benefit of the Postmaster-General.

Mr Austin Chapman:

– I always read the honorable member’s speeches.

Mr LONSDALE:

– That statement may be true, but I very much doubt that it is.

Sir John Forrest:

– I shall tell my colleague, any way.

Mr LONSDALE:

– I do not think the Treasurer would tell the honorable gentleman as I would. I have been pleading the cause of the settlers in the back-blocks, and urging that, instead of extending penny postage to foreign countries, it should be confined to the Commonwealth, and that the settlers in the interior should no longer be called upon to defray a proportion of the cost of their mail contracts. That would be taking a worthy step in the direction of helping unfortunate settlers. I was about to address myself to the subject of preferential trade, but I understand that the Treasurer has told the leader of the Opposition that he is willing to report progress at half-past 10 o’clock.

Sir John Forrest:

– When the honorable member has finished.

Mr LONSDALE:

– I cannot possibly finish my speech for some time. I do not wish to begin the discussion of another subject now, and to have to repeat my remarks to-morrow.

Sir John Forrest:

– Does the honorable member wish to speakon another occasion ?

Mr LONSDALE:

– Yes.

Sir John Forrest:

– I understood that the honorable member was going, to speak foronly half-an-hour.

Mr LONSDALE:

– No. The deputy leader of the Opposition asked me to speak, and he said that he would see the right honorable gentleman and get him to report progress at half -past10 o’clock.

Sir John Forrest:

– I did not understand that, but still I shall carry out my promise.

Mr LONSDALE:

– I shall be very much obliged to the right honorable gentleman if he will.

Progress reported.

page 2520

METEOROLOGY BILL

Mr. SPEAKER reported a message from the Senate stating that it had agreed to the amendment made by the House of Representatives in this Bill.

page 2520

PUBLIC SERVICE BILL

Motion (by Mr. Brown) proposed -

That leave be given to bring in a Bill for an Act to amend the Commonwealth Public Service Act 1902.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I do not know what the honorable member contemplates in his Bill.

Sir John Forrest:

– He can only take theBill on a Thursday.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Is it not remarkable that the Government consent to a private member bringing in a Bill to amend the Public Service Act?

Sir John Forrest:

– This is really only a motion to get the Bill printed.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– A proposal of this kind is essentially Government , business. One wonders where our governmental responsibility has gone to when Ministers permit a private member to bring in a Bill to amend an Act relating to the Public Service. Surely the Government ought to take such a measure under their own control, and not allow a private member, however estimable he may be, to introduce it on a Government right.

Sir John Forrest:

– We have not yet seen the Bill.

Mr Wilks:

– Then the Government ought to resist the measure.

Mr Isaacs:

– Surely a private member has the right to introduce legislation?

Mr.Bamford. - No doubt the Public Service Act requires amendment, and if the Government will not introduce the legislation, somebody must.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– I would give a private member the right to do everything that is proper, but I am pointing out that the introduction of this Bill by the honorable member for Canobolas is improper. The introduction of measures of this kind is one of the most vital functions of the Federal Government. We have passed an Act guaranteeing the independence of the Public Service Commissioner, and I should like to know whether the Government have any idea of what the proposals in this Bill are. I should have thought that the least an honorable member in charge of such a measure should’ do, would be to acquaint the Government with his intentions. For all I know, the honorable member for Canobolas may have done so ; but it is an unheard of thing, in my recollection, to permit a private member to submit a motion of this character in Government time.

Mr ISAACS:
Attorney-General · Indi · Protectionist

– It is only an act of courtesy to allow an honorable member leave to introduce a Bill on any subject.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– On anysubject?

Mr Wilks:

– Would the AttorneyGeneral allow a private member to introduce a Bill to amend the Judiciary Act?

Mr ISAACS:

– Any honorable member has the right to ask for leave to introduce a Bill. When the Bill is brought before the House it will be competent for the Government, or honorable members, to raise any objection. The Government would then be in a position to know whether or. not the Bill ought to be proceeded with ; but it is only common courtesy to permit any honorable member - indeed, it is an honorable member’s right - to ask for leave to introduce a Bill on any publicmatter.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– But this is an unusual method of getting leave.

Mr ISAACS:

– The honorable member means as to the time. But the House has given leave, and I point out that any honorable member may submit a motion on any subject, no matter how public it may be.

Mr Wilks:

– A motion is all right.

Mr ISAACS:

– I can see no distinction between a motion and the present instance of giving leave to a private member to introduce a Bill. When the Bill is before us, it will be a matter for consideration as to how it should be dealt with.

Mr SPEAKER:

– There is nothing at all unusual in bringing on this motion now. The motion has been on the notice-paper for some time, and is on the notice-paper to-day ; and it would have had to be dealt with in some way before we rose. There is no necessity to ask for leave to move it, nor has leave been asked.

Question resolved inthe affirmative.

Motion (by Mr. Brown), proposed-

That the Bill he now read a first time.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– Mr. Speaker-

Mr SPEAKER:

– There can be no debate on a motion for the first reading of a Bill.

Question resolved in the affirmative.

Bill read a first time.

Motion (by Mr. Brown), proposed -

That the second readings be made an order of the day for Thursday, 16th August.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– If this business is properly before the House now, the Government must have postponed their own business for the purpose of permitting the Bill to be introduced. My complaint at the present time is that the Government should have set aside their own business.

Sir John Forrest:

– Not at all. We were adjourning, having reported progress on the Budget half-an-hour before the time, in order to please the honorable member.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– The Government business must have been postponed, or this Bill could not have been introduced.

Mr HUME COOK:
BOURKE, VICTORIA · PROT

– The Speaker has just pointed out that the motion of the honorable member for Canobolas would have had to come on, in any case.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– After the Government business, certainly. The motion of the honorable member for Canobolas stands after the Government business on the notice-paper.

Mr Isaacs:

– The motion of the honorable member for Canobolas would have had to be formally called on, and would have been called on.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– There is no doubt that an honorable member may do anything he pleases on private members’ day, but a private member may not take Government nights for the purpose of introducing business which, in my judgment, ought to be under the control and direction of the Government. But we have surrendered responsible government during the whole of the currency of this Parliament, and this is only another instance.

Question resolved in the affirmative.

page 2522

ADJOURNMENT

Budget Debate : Order of Business

Mr ISAACS:
Attorney -General · Indi · Protectionist

– I move -

That the House do now adjourn.

Without desiring in the smallest degree to limit the fair dimensions of debate on the Budget, I ask the kind consideration of honorable members to the desirability of ending, if possible, the general debate tomorrow.

Mr Wilks:

– There are twenty honorable members to speak.

Mr ISAACS:

– I do not want to depriveany honorable member of any right, but, considering the large amount of work we have to do, and the comparatively short time at our disposal, I suggest that the general debate ought to be finished tomorrow.

Mr JOSEPH COOK:
PARRAMATTA, NEW SOUTH WALES · FT; ANTI-SOC from 1906; LP from 1910; NAT from 1917

– To what business does the AttorneyGeneral allude? I see no business on the notice-paper after the Budget, except the Bounties Bill.

Mr Austin Chapman:

– There will be the Tariff presently.

Mr.JOSEPH COOK.- The AttorneyGeneral makes a very fair proposal to the Housecontgment on therebeing a con gested business-paper, and little time in which to get through that business. When an appeal of this kind is made on the second night of a Budget debate, it can only be because of some overpoweringly important proposals which are already on the business-paper waiting to , be dealt with. If there are such proposals in contemplation, we ought to be so informed. I have told the Government more than once that if they will announce their intentions for the session we might very well agree to wipe off the business, and get to the country as early as possible. But we wish to know, for instance, what is to be done with regard to the Government’s newfangled proposals of an electoral character? We are asked to facilitate the discussion on the Budget, but I see no very great reason to curtail the debate if it is to be merely for the purpose -of introducing such proposals. If,on the other hand, there are urgent Tariff proposals to be brought forward, with a view to relieve the alleged strangled and decaying industries of Victoria, they shall receive the very earnest consideration ofevery honorable member on this side. If the Government will say that the Tariff proposals are ready, and that they are prepared to plunge into a Tariff debate, I think I can undertake, on behalf of the Opposition, that the debate on the Budget may conclude to-morrow. There are, however, important matters in the Budget which require consideration in the absence of anybusiness of more urgency. I say, therefore, that the Attorney-General makes the appeal rightly if he has urgent business to bring before the House, but in a session like this when we are supposed to be wiping off the work of Parliament, newfangled proposals which found no place on the programme at the beginning ought not to be brought forward. I speak apart altogether from the merits of those proposals. I am referring merely to the time at which they should be introduced. If, therefore. the Attorney-General will state that he does not desire to introduce proposals other than those of urgency - that he desires to deal with the Tariff, or other proposals of that kind - there will not be much trouble in meeting him.

Mr Isaacs:

– Of course, the Tariff is included.

Question resolved in the affirmative..

House adjourned at 10.42 p.m.

Cite as: Australia, House of Representatives, Debates, 8 August 1906, viewed 22 October 2017, <http://historichansard.net/hofreps/1906/19060808_reps_2_32/>.

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